Sebi bans broker Patel Wealth, 4 of its directors for 'spoofing'

Mumbai: The Securities and Exchange Board of India (Sebi) has barred stock broker Patel Wealth Advisors (PWA) and four of its directors from dealing in the securities market for indulging in alleged manipulative trading activity. In an ex-parte interim order, it has directed to impound ₹3.2 crore of illegal gains made by them.

The regulator alleged that the stock broker and its four directors engaged in 'spoofing'-a deceptive market manipulation strategy involving the placement of large, non-genuine orders to mislead market participants and distort price discovery.

Spoofing, a practise more commonly seen in global markets, was employed by PWA through a sophisticated scheme of placing large buy orders well below prevailing market prices, with full disclosure but no intent to execute.


These orders created a false impression of demand, prompting other market participants to react. As prices moved up in response to this artificial demand, PWA would sell its holdings at favourable prices. Once its sell trades were completed, the original buy orders were swiftly cancelled. Sebi's probe, covering three years, uncovered 292 instances of such manipulation across 173 distinct scrips. Despite warnings and actions by NSE, including proceedings in May 2023, PWA continued these practices unabated.

PWA's phantom orders constituted nearly 90% of the pending order book in certain stocks-a stark indicator of the extent of market distortion, Sebi said.