JPMorgan unit Copthall Mauritius seeks SEBI clarification after market manipulation order

A JPMorgan Chase unit facing action from India’s market regulator is expected to argue that the alleged violations were technical in nature rather than an attempt to manipulate the market, according to a report by Bloomberg. Copthall Mauritius Investment Ltd., which operates as a foreign portfolio investor (FPI) for JPMorgan’s global clients, is likely to seek further clarification from the Securities and Exchange Board of India (SEBI). However, it is not currently expected to appeal the regulator’s order.SEBI alleges closing-auction manipulationSEBI recently barred Copthall from accessing India’s capital markets in its first enforcement action concerning alleged manipulation of the country’s new closing auction mechanism. SEBI Bans Copthall Mauritius, Mansi Broking Over Alleged CAS Manipulation; Freezes ₹3.67 Crore GainsAccording to the regulator’s interim order, Copthall and Mumbai-based brokerage Mansi Share and Stock Broking Ltd. allegedly carried out trades during the closing auction on August 13 that influenced the indicative equilibrium price of the BSE Sensex. SEBI alleged that the transactions benefited their positions in Sensex options.The regulator imposed a combined penalty of ₹3.7 crore, describing the amount as unlawful gains, and restricted both entities from participating in the capital market.SEBI board member Kamlesh Chandra Varshney said the trading restrictions would remain until the alleged unlawful gains are returned. Both entities have 21 days to respond to the allegations and can request a personal hearing. JPMorgan weighs compliance reviewCopthall is expected to ask SEBI for additional information and seek clarification during its hearing. JPMorgan may also conduct an internal review to identify any potential compliance gaps, the people said.Copthall is separate from JPMorgan India Pvt., which is registered with SEBI as a stockbroker and merchant banker. Therefore, the order against the Mauritius-based entity does not directly restrict JPMorgan India’s operations.The case comes amid increased regulatory scrutiny of foreign institutions participating in India’s equity market. SEBI has stepped up enforcement against alleged market manipulation, including action involving global trading firms.

The subsidiary — called Copthall Mauritius Investment Ltd — plans to seek clarifications but is unlikely to appeal the order for now, sources said