SEC charges Indian brokerages, including Edelweiss, Ambit for unauthorised dealings

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SEC is further probing the role of other companies, for potential violation of similar nature. (Reuters) SEC is further probing the role of other companies, for potential violation of similar nature. (Reuters)
SummaryUS market regulator SEC is probing role of som topnotch Indian and others for violations.

investors, Motilal organised and sponsored an annual conference in the United States to which Motilal brought representatives of Indian

issuers and invited US investors, it said.

Further, Motilal bought and sold the securities of Indian issuers on Indian stock exchanges on behalf of US investors in exchange for commissions and soft dollar payments.

During the relevant period, as a result of these activities, Motilal received from at least 42 US institutional investors transaction-based compensation in the amount of

approximately USD 13.7 million, it said.

After being contacted by SEC, the regulator said, Motilal promptly undertook corrective action, including by cancelling a planned conference in the US, entering into an agreement with a US registered broker-dealer, and initiating registration with the Commission as a broker-dealer.

JM Financial solicited and provided brokerage services to US investors from at least October 2007 until February 2012, the SEC said.

As part of its cross-border activity with US investors, JM Financial bought and sold securities of Indian issuers on Indian stock exchanges on behalf of at least 91 US investors and received transaction-based compensation of about USD 2.3 million.

For its overall services to Indian issuers, JM Financial received approximately USD 24 million in transaction-based compensation based upon a percentage of the value of the offerings, a portion of which was attributable to purchases by US investors, SEC said.

However, JM Financial also undertook corrective action after being contacted by SEC, the regulator said.

In its order against Edelweiss, SEC said that the Indian firm solicited and provided brokerage services to US investors from at least 2007 until July 2011.

As part of its cross-border activity with US investors, Edelweiss bought and sold securities of Indian issuers on Indian stock exchanges on behalf of US investors and received transaction-based compensation of about USD 9.4 million, it said.

Edelweiss also participated as a lead or co-lead manager in public offers of seven Indian companies in which shares were sold and/or marketed to US investors. It also

participated in private placements of securities structured as 'Qualified Institutional Placements' and alternative asset funds that were marketed to the US investors.

After being contacted by the SEC staff, Edelweiss also promptly undertook corrective action, including by immediately ceasing all cross-border US business, the regulator said.

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