Sebi has reportedly conducted search and seizure operations on options traders who allegedly benefited from prior information of regulatory actions against certain banks and NBFCs.
Sebi officials reportedly noticed that a group of traders had been shorting stocks of banks and NBFCs prior to the public disclosure of regulatory actions.
Sebi has reportedly conducted search and seizure operations on options traders who allegedly benefited from prior information of regulatory actions against certain banks and NBFCs.
Last month, officials from the market regulator visited the residences of about 10 traders suspected of shorting stocks via options shortly before regulatory actions. Among the many cases, one trader's office was subjected to a search and seizure operation, as per a report by moneycontrol.
These investigations were initially started by the market watchdog during June month.
Sebi scrutinized trades executed during the period when the central bank took action against the entities. Officials reportedly noticed that a group of traders had been shorting stocks of banks and NBFCs prior to the public disclosure of regulatory actions.
As per sources cited in the report, traders conducted numerous transactions, possibly totaling close to 10 trades. The highest trade yielded nearly Rs 1 crore. Sebi's investigation is centered around whether these traders had access to sensitive information affecting stock prices.
Since the past few months, banks have been facing heavy pressure from regulatory bodies around unmet compliances. Earlier this year, Kotak Mahindra Bank came under RBI's radar and barred the private lender from onboarding new customers via its digital app. The central bank also restricted the bank from issuing credit cards. "Serious deficiencies and non-compliances were observed in the areas of IT inventory management, patch, and change management, user access management, vendor risk management, data security, and data leak prevention strategy, business continuity and disaster recovery rigour and drill, etc," the regulator stated in a press release.
Bank of Baroda faced a similar issue last year, after RBI imposed restrictions on the bank's digital app, BoB World, from taking on new customers. However, the regulator later lifted all these restrictions, during May.