SEBI bars Rajkot-based stock broking firm PWA from market for 3 years over ‘order spoofing’
The Securities and Exchange Board of India (SEBI) on Monday debarred Rajkot-based stock broker firm Patel Wealth Advisors (PWA) and its four directors from dealing in the stock market for three years over alleged ‘order spoofing’ and directed seizure of ₹3.22 crore of illicit profits they had acquired.Order spoofing is an illegal tactic in which a stock trader places a bid or offer with no intention of executing it, aiming to cancel it before it’s filled, while simultaneously carrying out trades on the opposite side of the market.In this tactic, artificial fluctuations in market prices were observed, which weakened market efficiency, as noted by SEBI’s full-time member Kamlesh Varshey in a 41-page order. The findings of the capital market regulator indicate that the PWA firm was involved in extensive spoofing activities in 173 scrips across the cash and derivatives segments between January 2021 and January 2024. As a result of their actions, 621 instances of unusual spoofing occurred.In this case, SEBI’s findings further indicate that PWC placed several large orders in scrips at significantly lower or higher prices than the prevailing market prices, without the intention of executing those trades.These pending orders created a false impression of increased demand and supply in the scrips, thereby misleading investors and impacting prices. SEBI noted that PWC executed contra transactions in a short period and wrongfully made profits. Later, the large pending orders were cancelled.The regulatory board further stated that despite repeated show-cause notices and preliminary actions by the National Stock Exchange (NSE), the company continued with unfair trading practices. According to the order, SEBI has developed the capability to detect such complex and widespread order book manipulations.SEBI said it will undertake a probe into the matter. The four directors of PWA Denish Maheshbhai Patel, Mitul Umedlal Vora, Kaushal Vasantrai Patel and Minish Maheshbhai Patel have been banned by the regulator for three years.Also read:SEBI warns investors against ‘opinion trading platforms’, cites no legal protection
The Securities and Exchange Board of India (SEBI) on Monday debarred Rajkot-based stock broker firm Patel Wealth Advisors (PWA) and its four directors from dealing in the stock market for three years over alleged ‘order spoofing’ and directed seizure of ₹3.22 crore of illicit profits they had acquired.
Order spoofing is an illegal tactic in which a stock trader places a bid or offer with no intention of executing it, aiming to cancel it before it’s filled, while simultaneously carrying out trades on the opposite side of the market.
In this tactic, artificial fluctuations in market prices were observed, which weakened market efficiency, as noted by SEBI’s full-time member Kamlesh Varshey in a 41-page order.
The findings of the capital market regulator indicate that the PWA firm was involved in extensive spoofing activities in 173 scrips across the cash and derivatives segments between January 2021 and January 2024. As a result of their actions, 621 instances of unusual spoofing occurred.
In this case, SEBI’s findings further indicate that PWC placed several large orders in scrips at significantly lower or higher prices than the prevailing market prices, without the intention of executing those trades.
These pending orders created a false impression of increased demand and supply in the scrips, thereby misleading investors and impacting prices. SEBI noted that PWC executed contra transactions in a short period and wrongfully made profits. Later, the large pending orders were cancelled.
The regulatory board further stated that despite repeated show-cause notices and preliminary actions by the National Stock Exchange (NSE), the company continued with unfair trading practices. According to the order, SEBI has developed the capability to detect such complex and widespread order book manipulations.
SEBI said it will undertake a probe into the matter. The four directors of PWA Denish Maheshbhai Patel, Mitul Umedlal Vora, Kaushal Vasantrai Patel and Minish Maheshbhai Patel have been banned by the regulator for three years.
Also read:
SEBI warns investors against ‘opinion trading platforms’, cites no legal protection
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