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Unauthorised Services: 4 Indian Brokerages to Settle SEC Charges

Wednesday, November 28, 2012
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Besides, the Securities and Exchange Commission (SEC) is further probing the role of other companies, which may include some from India, for potential violation of similar nature.

The SEC said in a statement late last night that the four financial services firms were providing brokerage services to institutional investors in the U.S. without being registered with the SEC as required under the federal securities laws.

“The four firms — Ambit Capital Private Ltd, Edelweiss Financial Services Ltd, JM Financial Institutional Securities Private Ltd, and Motilal Oswal Securities Ltd — agreed to pay more than $1.8 million combined to settle SEC’s charges,” the regulator said.

Despite being unregistered broker-dealers, the four companies engaged the U.S. investors here through sponsored conferences, regular travel of their employees to meet the U.S. investors, traded securities of India-based issuers on behalf of U.S. clients and participated in securities offerings from India-based issuers to U.S. investors, SEC said.

In their respective settlements, the firms agreed to be censured while neither admitting nor denying the SEC’s charges. Ambit agreed to pay disgorgement and prejudgement interest totalling $30,910, Edelweiss agreed to pay $568,347, JM Financial $443,545 and Motilal Oswal Securities agreeing to pay $821,594.

The SEC said that the companies’ “cooperation with the Commission staff and their prompt remedial measures”, besides their initiating registration with the SEC as a broker-dealer, were “important factors in accepting the firms’ settlement offers, particularly the Commission’s decision not to impose a cease-and-desist order or a penalty.”

The regulator said it “is continuing to look for potential violations at other firms“.

With regard to Ambit, SEC said that it systematically solicited U.S. institutional investors for the purpose of providing brokerage services from at least January 2011 through April 2011.

When contacted by SEC in May 2011, Ambit said its solicitation had not yet resulted in significant brokerage business from U.S. investors.

“However, Ambit had received some transaction-based compensation for buying and selling the securities of Indian issuers on Indian stock exchanges on behalf of U.S. investors,” the regulator said.

Also Read: 5 Red Flags of a Financial Scam


Source: PTI
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