Spoofing scam: Sebi bams Patel Wealth Advisors, dirs

Market regulator Securities and Exchange Board of India (Sebi) on Monday ordered impounding of Rs 3.22 crore from a stock broking company and its four directors after finding them to have indulged in "order spoofing" and making unlawful gains. In the interim order, the market watchdog also barred the company and its directors from accessing the securities markets.

The alleged order spoofing was followed by the company over 292 scrip contract days spread over 173 different scrips.

Order spoofing is a type of manipulative trading activity which involves placing bid or ask orders, with the intent of cancelling the said orders before execution while simultaneously executing trades on the opposite side of the book. The side (i.e. buy or sell) on which such large orders are placed and cancelled is known as “Spoof” side and the suspect trader involved in such kind of activity is known as spoofer.

"An amount of INR 3,22,62,367.05, being the total unlawful gain earned from the alleged violations, shall be impounded, jointly and severally from the Noticees and the Noticees are directed to open fixed deposit account(s) in any Noticees’ name so as to credit or deposit the aforesaid amount of unlawful gains with a lien marked in favour of SEBI and the amount kept therein shall not be released without permission from SEBI," a 41-page order said.

The company in question is Patel Wealth Advisors Private Limited (PWAPL) and its directors are Denish Maheshbhai Patel, Mitul Umedlal Vora, Kaushal Vasantrai Patel and Minish Maheshbhai Patel. Barring Minish, all others are promoters as well.

Sebi's interim order came following a probe into the trading activities of Patel Wealth Advisors for the period between January 1, 2022 and January 31, 2025 to ascertain as to whether its trading activities were in contravention of its provisions.

The order noted that the alleged illegal activities persisted despite repeated letters and communication from NSE even as the exchange initiated proceedings against PWAPL by issuing an SCN dated May 16, 2023.

"PWAPL was well aware of its alleged spoofing activities but despite the issuance of SCN by NSE, PWAPL has brazenly continued to indulge in unfair trade practices as far as till January 2025," the order noted.

"The order spoofing is a manipulative, fraudulent and unfair trade practice employed by PWAPL to deceive other market participants and profit from price fluctuation they induced unwary investors in the market. This practice distorted market prices and undermined market efficiency," the order said further.

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