JPMorgan Unit Barred from Indian Market Over Auction Manipulation

The Securities and Exchange Board of India (SEBI) has banned a Mauritius-based unit of JPMorgan Chase & Co. from the country's capital market over allegations of manipulating the newly introduced auction-based system for share price discovery.

The regulator accused Copthall Mauritius Investment Ltd., a subsidiary of JPMorgan, and local firm Mansi Share and Stock Broking Ltd. of undertaking manipulative trades during the closing auction window on August 13 to influence the indicative equilibrium price of the BSE Sensex Index.

According to SEBI, both entities placed outsized orders in Sensex stocks during the closing auction, accounting for more than 90% of all orders in some securities. They subsequently cancelled large portions of the orders, influencing indicative closing prices without executing the trades in full.

The regulator impounded Rs 37 million ($386,000), which it described as wrongful gains made by Copthall and Mansi Share. The entities have been given 21 days to respond to the allegations, including seeking a personal hearing.