The Securities and Exchange Commission on 27th November charged four financial services firms based in India for providing brokerage services to institutional investors in the United States without being registered with the SEC as required under the federal securities laws.
The four firms – Ambit Capital Pvt Ltd, Edelweiss Financial Services Ltd, JM Financial Institutional Securities Pvt Ltd, and Motilal Oswal Securities Ltd – agreed to pay more than $1.8 million combined to settle the SEC’s charges.
“The broker-dealer registration provisions are critical safeguards for the integrity of our securities markets,” said Scott W. Friestad, Associate Director of the SEC’s Division of Enforcement. “These four firms and all other foreign broker-dealers must educate themselves on the U.S. laws and regulations when they provide services to U.S. investors.”
According to the SEC’s orders against the firms, they engaged with U.S. investors in some of the following ways despite being unregistered broker-dealers: Sponsored conferences in the US, had employees travel regularly to the US to meet with investors, traded securities of India-based issuers on behalf of US investors and participated in securities offerings from India-based issuers to U.S. investors
In their respective settlements, the firms agreed to be censured while neither admitting nor denying the SEC’s charges. Ambit agreed to pay disgorgement and prejudgment interest totaling $30,910. Edelweiss agreed to pay $568,347. JM Financial agreed to pay $443,545. Motilal agreed to pay $821,594.
“The firms’ cooperation with the Commission staff and their prompt remedial measures, including entering into Rule 15a-6 chaperoning agreements with U.S. registered broker-dealers and/or initiating registration with the Commission as a broker-dealer, were important factors in accepting the firms’ settlement offers, particularly the Commission’s decision not to impose a cease-and-desist order or a penalty,” said Mr. Friestad.
The SEC’s investigation, which is continuing to look for potential violations at other firms, has been conducted by Amy Friedman and supervised by Laura Josephs.