SEBI has held Delhi-based stock broker OPG Securities and its promoters guilty of ‘ Fraudulent and Unfair Trade Practices’ (FUTP) in the NSE co-location scam. The broker and the directors including Sanjay Gupta, Sangeeta Gupta and OM Prakash Gupta have been jointly fined ₹5 crore.
SEBI said OPG had made unfair gains of more than ₹15 crore, which have been disgorged.
On Wednesday, SEBI said it had dropped the charges of fraud against Ravi Narain and Chitra Ramkrishna, former bosses of the NSE, and fined them ₹25 each. But SEBI had held OPG and its directors guilty for violation of FUTP norms. The order against the two NSE ex-bosses and OPG relates to manipulation over tick by tick (TBT) data transmission. TBT data is key for high speed Algo trading.
OPG is said to have gained preferential access to NSE’s trading servers. The forensic investigations into the matter had revealed names of several other brokers too.
Disporportionate gain
“It is noted that the material available on record has clearly brought out the amount of disproportionate gain made by the Noticees which amount to ₹15.57 crore on account of connections established to the Secondary POP (point of presence) servers for the 134 days without any justifiable reasons,” SEBI said in its order.
SEBI said its fine was based on the amount of disproportionate gain or unfair advantage, wherever quantifiable, made as a result of the default, amount of loss caused to an investor or group of investors as a result of the default; the repetitive nature of the default.
SEBI said the only mitigating factor is that OPG based on the directions of SAT had already deposited a sum of ₹7.5 crore with SEBI. In terms of section 15HA of the SEBI Act, the penalty which can be imposed is up to ₹25 crore and not less than ₹5 lakh and which may extend up to three times of the unlawful gains made by the broker. In this case, unlawful gains are to the tune of ₹15.57 crore and the same have been disgorged by way of an Order dated April 30, 2019.