Sebi bars Patel Wealth Advisors, 4 directors over ‘order spoofing’ charges

On Monday, the Securities and Exchange Board of India (Sebi) prohibited stock broker Patel Wealth Advisors (PWA) and its four directors from participating in the securities market due to alleged order spoofing. Order spoofing is an unlawful activity in which an individual submits a bid intending to withdraw the order prior to its execution while concurrently making trades on the opposing side.

In an interim ex-parte order, the regulator has additionally instructed to confiscate ₹3.22 crore in illegal profits earned by them. Sebi will conduct a thorough inquiry into the issue.

Sebi’s investigation reveals that PWA made several large orders in different scrips at prices considerably below or above the current market price without intending to finalize these trades. These outstanding orders created a misleading perception of heightened demand or supply for the scrips, thereby deceiving investors and impacting the price, Sebi observed.

In a brief period, PWA conducted contra transactions and obtained illicit profits. Subsequently, the outstanding large order was called off. The Sebi directive highlights that the firm persisted in engaging in unethical trading practices even after multiple show-cause notices and initial actions by the National Stock Exchange (NSE).

The order states that Sebi has established the capacity to detect such intricate and extensive manipulations of the order book.