Angel One on Friday settled an alleged front-running case with capital markets regulator Sebi by paying Rs 21.64 lakh towards settlement charges.
The settlement order came after Angel One had filed a settlement application on May 15, 2024, proposing to settle the instant proceeding “without admitting or denying the findings of fact and conclusions of law”.
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“It is hereby ordered that the instant proceeding initiated against the Applicant, vide Show Cause Notice dated April 24, 2024, is disposed of,” Sebi said.
Sebi had undertaken an investigation to ascertain whether there was any violation of PFUTP (Prohibition of Fraudulent and Unfair Trade Practices) rules by certain entities during the period from January 2021 to October 2022, who were consistently placing orders ahead of the Big Clients, including Bharat Kanaiyalal Sheth Family Trust in the equity (cash) segment of NSE and were squaring off the same.
The investigation revealed that Jitendra Kewalramani, who was the Authorised Person (AP) of Angel One Ltd (Noticee/ Applicant) was, directly or indirectly, in possession of the details of the impending orders to be placed by the big clients.
Accordingly, front-running trades were allegedly executed by him in his own trading account and the trading accounts of certain other entities, who were all related/ associated with him during the investigation period, Sebi said.
It was further observed that all the alleged front runners, except two entities, had executed their front-running trades through the noticee (Jitendra Kewalramani), the AP of the noticee was alleged to be the main front runner of the front-running orders executed.
The regulator also observed that the orders executed in the accounts of his clients by the AP were done without maintaining a record of the order instructions given by the clients as mandated by Sebi.
Further, the signatures on the order instruction sheets were taken after the orders were executed. Kewalramani had not maintained a record of the pre-order placement and had obtained such documents from the clients after the orders were executed.
According to Sebi norms, the stock broker will be responsible for all the acts of omission and commission of his authorised person(s) and/or their employees, including liabilities arising therefrom.
Thereafter, a Show Cause Notice was issued by the regulator to Angel One on April 24, 2024.
In its show cause notice, Sebi alleged that the noticee had failed to maintain a proper record of the execution of trades of clients in the form of a Voice Recording System (VRS) to record the placement of orders by the clients through its AP and to maintain order sheets with a time stamp indicating the time when the order for trade was placed by its client.
Accordingly, Angel One allegedly failed to exercise due skill and in compliance with statutory requirements in violation of the code of conduct of Stock Brokers rules.
Pursuant to receipt of the settlement application, the applicant filed revised settlement terms and submitted details of the corrective action/ measures put in place by it to prevent the re-occurrence of similar violations.
After remitting the settlement fee of Rs 21.64 lakh, Angel One settled the case with Sebi.
(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)
First Published: Sep 27 2024 | 8:05 PM IST
