Markets regulator SEBI has settled with Morgan Stanley France SA a case of an alleged violation of securities norms after payment of a settlement amount. The matter pertains to certain trades in long-dated Nifty options between Reliance Strategic Investments Ltd and Morgan Stanley France SA done back in 2017.
The case has been settled upon payment of Rs 25,35,000 by Morgan Stanley France SA, according to a settlement order issued on Thursday. The Securities and Exchange Board of India (SEBI) conducted an investigation into the trades done on July 31, August 8 and August 10, 2017.
Based on the findings of the probe, SEBI had alleged violations of certain PFUTP (Prohibition of Fraudulent and Unfair Trade Practices) regulations by both entities. In the show cause notice issued on December 2, 2021, it was also alleged that the act of trading 11,400 put options at a price on the basis of mutual arrangement amounted to active concealment of understanding of Reliance Strategic Investments Ltd and Morgan Stanley France SA with respect to the fair price.
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Pending adjudication proceedings, Morgan Stanley France SA filed a settlement application on February 25, 2022. Later, SEBI's High Powered Advisory Committee (HPAC) recommended that the case may be settled upon payment of Rs 25,35,000 and that the settlement amount should be recovered from the "officer in default" so that investors are not penalised.
SEBI's panel of Whole Time Members approved the recommendation and Morgan Stanley France SA remitted the settlement amount on March 1, 2023, as per the order. Accepting the additional settlement term, Morgan Stanley France SA, on March 20, informed SEBI that it "undertakes to file a compliance letter confirming recovery of settlement amount from such officer, in due course following the issuance of the settlement order by SEBI".
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