JPMorgan Unit Faces Allegations of Manipulation in India's Closing Auction

A unit of JPMorgan Chase & Co., Copthall Mauritius Investment Ltd., is facing allegations of non-compliance from India's market regulator, SEBI. The regulator alleged that Copthall and a local brokerage, Mansi Share and Stock Broking Ltd., executed manipulative trades during the closing auction window on August 13 to influence the indicative equilibrium price of the BSE Sensex Index.

The regulator fined both entities ₹3.7 crore ($386,000) in what it termed unlawful gains and banned them from accessing the capital market. The trading ban on Copthall and Mansi Share will be lifted once the entities pay back the unlawful gains to SEBI.

Copthall plans to seek clarifications but is unlikely to appeal the order for now, according to people familiar with the matter. This suggests an effort to take a more conciliatory approach towards Indian regulators, who have become increasingly proactive in reforming the market and haven't hesitated to penalize foreign firms active in its $5.1 trillion stock market.

JPMorgan is also weighing launching an internal assessment to identify gaps in compliance, if any. A spokesperson for JPMorgan declined to comment.