Sebi fines ₹5.2 cr on OPG Securities, others in NSE co-location case

New Delhi, Apr 2 (PTI) Markets regulator Sebi on Wednesday imposed a penalty of ₹5.2 crore on stock broker OPG Securities and its directors for unfair access to secondary market servers in connection with the NSE co-location issue.

They have been directed to pay the fine within 45 days.

In its 25-page order, Sebi levied a fine of ₹5 crore on OPG Securities and its directors — Sanjay Gupta, Sangeeta Gupta, and Om Prakash Gupta — jointly for engaging in unfair trade practices.

Additionally, Sebi imposed a fine of ₹10 lakh each on OPG Securities and Sanjay Gupta for non-compliance with the regulator’s code of conduct and hampering the investigation, respectively.

“I note that SAT has affirmed in its order that Noticee 1 (OPG Securities) gained an unfair advantage by repeatedly accessing the Secondary POP Server, thereby making unlawful gain. Regardless of the quantum of such unlawful gain, it is evident that the manner in which Noticee 1 connected to the secondary server constituted an unfair practice, which was recurrent in nature. This amounts to a serious violation,” Sebi Adjudicating Officer Asha Shetty said.

Furthermore, the regulator highlighted that OPG Securities failed to uphold standards of integrity, due skill, care, and diligence in its business operations, while also neglecting to ensure compliance with statutory requirements.

Since the Guptas were directors of OPG Securities during the period of violation, they were deemed vicariously liable for the company’s actions.

In response to the penalties, the noticees argued that the fines should be put on hold until the Supreme Court and Securities Appellate Tribunal (SAT) decide on pending appeals.

They contended that accessing the secondary server was not prohibited and cited past rulings by Sebi adjudication officers that supported this view. Furthermore, they requested an opportunity to challenge the methodology used for computing the penalties.

However, Sebi clarified that the adjudication process was solely focused on determining the quantum of the penalty and not on re-evaluating the established violations.

Despite the Supreme Court’s pending decision, Sebi’s adjudicating officer decided to proceed with the penalty process since the violations had already been confirmed.

The noticees had been given ample opportunities to present their case, and the adjudicating officer found no merit in postponing the penalties.

In the same matter, Sebi had initially imposed a penalty of ₹5.2 crore on the entities in February 2021. Following this order, they filed an appeal with the SAT. In its July 2023 order, the SAT remanded the matter to the Sebi Adjudicating Officer, directing a reconsideration of the penalty’s quantum.