IDBI Capital Markets & Securities has paid Rs 13 lakh as settlement charges to capital markets regulator Sebi in a case related to alleged violation of stock broker regulations. The order came after the applicant proposed to settle the instant proceedings initiated against it, without "admitting or denying the findings of fact and conclusions" of law.
Sebi conducted an investigation into the trading activities of Kajal Ilesh Savla in the securities market. The period of investigation was from January 2019 to July 2022. During the investigation, Sebi observed that trades were being front-run and were placed through IDBI Capital Markets & Securities.
In addition, the probe also found that the applicant's chief dealer Gaurav Girish Dedhia (brother of Kajal Savla) placed all the front-run orders from the trading account of Kajal (maintained by Sushil Financial Services) from his office. Thus, it was observed by Sebi that Gaurav Dedhia, being the chief dealer in Applicant, was the main perpetrator behind the front-running activities of Kajal Savla.
However, Sebi observed that there was no monitoring of checks and balances by Applicant for effective implementation of their own policies to prevent misuse of price-sensitive information of the orders of their big clients and check the misdeeds of Gaurav as their chief dealer. Gaurav flouted the norms specified by the Applicant such as the Code of Conduct and Ethics and the Code of Conduct for trading in securities by employees including the policy of usage on mobile phones in the dealing room.
Further, it was alleged that the applicant had failed to check the irregularities and misdeeds at its own premises by their key employee and their utter negligence in this regard resulted in front-running activities by their chief dealer. Therefore, it was alleged that Applicant has allegedly violated the stock broker rules.
"I note that pending adjudication proceedings, Applicant proposed to settle the instant proceedings initiated against it, without admitting or denying the findings of fact and conclusions of law, through a settlement order and filed settlement application as per settlement rules," Sebi's Adjudicating Officer Soma Majumder said in the order on Friday. Pursuant to the receipt of the application, Sebi's High Powered Advisory Committee (HPAC) recommended to settle the matter on payment of Rs 13 lakh.
Subsequently, the applicant paid the amount and settled the case.
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