Regulator Sebi Tuesday barred OPG Securities and its three directors for five years from accessing securities market and asked them to disgorge illegal gains of more than Rs 15 crore in the NSE co-location facility case.
OPG Securities gained unfair advantage over other trading members and made illegal gains being the first logger as well as by connecting to a secondary server on a daily basis, a Sebi order said.
The unlawful gains made OPG by connecting to secondary server, which is used only in case of trouble in primary server, amounted to Rs 15.57 crore, according to the order.
The regulator had sent notices to OPG Securities and its directors during July 2018 after it completed an investigation based upon the forensic report of Deloitte and EY regarding 15 trading members, including OPG.
Sebi observed that since trading members were permitted to trade through secondary pop server only in case of disconnections to primary pop server, OPG by connecting to secondary pop server almost on a daily basis without valid reasons, gained unfair advantage over other TMs.
By doing so, it therefore made illegal gains being the first logger as well as by connecting to the secondary server which normally had very low load as other members would be connecting to primary pop server.
The use of secondary server is permitted only when there is trouble in the primary server and act as bach up for the primary one.
OPG Securities had logged onto the secondary server for a total of 670 trading days during the period from January 2010 to May 22, 2015 out of which it had forwarded complaints to co-location support on only 240 trading days.
Besides the remaining 430 trading days, no complaints were made by OPG to co-location support in respect of secondary server connections.
The unlawful gains made OPG by connecting to secondary server amounted to Rs 15.57 crores, Sebi said.
The firm violated PFUTP (Prohibition of Fraudulent and Unfair Trade Practices) norms and code of conduct for stock brokers.
Regarding the directors, Sebi said they are responsible for the affairs of the OPG and therefore are liable for the conduct of the firm.
Accordingly, it banned OPG and its three directors, Sanjay Gupta, Sangeeta Gupta and Om Prakash Gupta for five years.
Sebi also directed that OPG, in its capacity as a stock broker, shall not take any new clients for a period of one year.
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