India lifts ban on JPMorgan unit in index manipulation charge

India lifted a trading ban imposed on an unit of JPMorgan Chase & Co. after it deposited 29.6 million rupees ($311,230) in a bank account to comply with an order by the country’s market regulator, according to people familiar with the matter.

Copthall Mauritius Investment Ltd., a JPMorgan unit based in the island nation, and Mansi Share and Stock Broking deposited the alleged unlawful gains last month related to trades in the closing auction session on the BSE on Aug. 13, one of the people said, asking not to be identified as the information is private. Both were accused by Securities and Exchange Board of India of market manipulation in an August interim order.



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Representatives for JPMorgan and Mansi Share didn’t respond to an email request for comment. A spokesperson for the Indian regulator did not immediately respond to a request for comment.

While the regulator has allowed both entities to trade in India’s capital markets, its investigation into the alleged market manipulation will continue.

The market regulator had ordered both Copthall and Mansi Share to handover the gains after its investigation found that they executed manipulative trades during the end-of-day auction to influence the indicative equilibrium price of the BSE Sensex Index, benefiting their options positions on the benchmark.

India’s introduction of a new auction-based system to determine closing prices for over 200 stocks has undergone a rocky start with wild swings, particularly in derivatives tied to those stocks, and allegations of market manipulation. The regulator last week said it will release a discussion paper on determination of settlement price for futures and options contracts in light of the new mechanism.

The regulator is now planning to release a confirmatory order after studying the formal responses of both Copthall and Mansi Share to its allegations, and give each an in-person hearing, the person said. The regulator provided both companies 21 days to reply to its accusations.

Copthall is registered in Mauritius with a history of investment activity in India. The company once held Indian stocks worth more than 55 billion rupees, according to data platform Trendlyne.com. Those holdings have shrunk to less than 380 million rupees as of June 30, the data show.

It is, however, separate from J.P. Morgan India Pvt., which is registered with SEBI as a stock broker and merchant banker. The order against the Mauritian entity therefore does not directly impact JPMorgan’s activities in India mostly conducted through its local unit.