Introduction: Angel One, a leading stock brokerage, has paid Rs 21.64 lakh to settle allegations of front-running trades made by one of its authorised persons (AP), Jitendra Kewalramani. This follows an investigation by the Securities and Exchange Board of India (SEBI) into alleged violations of securities laws.
Allegations: According to SEBI, Kewalramani allegedly engaged in front-running trades, where he placed orders ahead of large clients such as the Bharat Kanaiyalal Sheth Family Trust (BKS Family Trust). The trades were reportedly conducted using his personal account and the accounts of associated entities.
Investigation Findings: The investigation covered the period from January 1, 2021, to October 31, 2022, during which SEBI found that Kewalramani had access to confidential information about upcoming client orders. He allegedly used this information to execute trades for personal gain, violating SEBI’s regulations on fraudulent and unfair trade practices.
Regulatory Violations: SEBI’s investigation revealed that most of the alleged front-running trades were conducted through Angel One. The brokerage was accused of failing to maintain proper records of client order instructions, such as time-stamped order sheets or voice recordings, as required by SEBI regulations.
Show Cause Notice: In April 2024, SEBI issued a Show Cause Notice to Angel One, questioning the brokerage’s failure to comply with regulatory requirements and seeking an explanation for the alleged violations. SEBI cited the brokerage’s lack of due diligence in overseeing its authorised persons, as mandated by its guidelines.
Settlement Application: On May 15, 2024, Angel One applied for a settlement under SEBI’s settlement regulations. In July 2024, SEBI’s internal committee reviewed the case and allowed Angel One to propose a revised settlement amount. The brokerage offered to pay Rs 21.64 lakh, which was approved by SEBI’s High Powered Advisory Committee in August 2024.
Corrective Measures: As part of the settlement process, Angel One submitted details of corrective actions taken to prevent similar violations in the future. SEBI confirmed that the brokerage had paid the settlement amount by September 23, 2024.
Conclusion: SEBI issued a final settlement order on September 27, 2024, officially concluding the proceedings against Angel One. The order prevents SEBI from taking further enforcement action against the brokerage for the same violation, provided that the representations made during the settlement process remain true.
Stay informed with our financial updates, stocks, bonds, commodities. Get global & political insights. Follow us & enable notifications for the latest updates.
