SEBI Passes Settlement Order Against Pawan N Agarwal After Receiving Ccomplaint from Finsec Law Advisors

SEBI Passes Settlement Order Against Pawan N Agarwal After Receiving Ccomplaint from Finsec Law Advisors

The Securities and Exchange Board of India (SEBI) has passed a settlement order in respect of Pawan N Agarwal in a case pertaining to mirroring of certain trades of Aequitas. The case was closed after payment of Rs. 44.20 lakhs towards settlement charges.

Finsec Law Advisors had filed a complaint alleging that Mr. Pawan N Agarwal (Applicant) and two others had violated the provisions of SEBI (Prohibition of Fraudulent and Unfair Trade Practices Relating to the Securities Market) Regulations, 2003, or PFUTP Regulations by engaging in front running/ mirror trading of trades of its clients Aequitas. Aequitas is a boutique investment company that caters to ultra-high net-worth individuals, family offices and foreign portfolio investors.

Following this, SEBI launched an investigation into whether these regulations and Sebi (Stock Broker and Sub Broker) Regulations, 1992 were violated. The investigation revealed that Agarwal had violated provisions of Section 12(A)(c) of SEBI Act and Regulation 3(a), 3(d) and 4(1) of PFUTP Regulations.

The market regulator started adjudication proceedings in November 2021. A show-cause notice dated April 2022 was served to Agarwal.

On 20 June, 2022, Agarwal informed the regulator that he had filed a settlement application under the SEBI Settlement Regulations.

The regulator’s Internal Committee then recommended a settlement amount of Rs. 44.2 lakhs. The High-Powered Advisory Committee on Settlement considered the settlement terms in March 2023 and recommended settlement of instant proceedings on payment of the said amount.

Pursuant to the same, the Applicant vide its e-mail dated 22 May, 2023, informed SEBI about the remittance of the settlement amount of Rs. 45,99,600, and the receipt was confirmed.

The SEBI order stated, “Therefore, in view of the acceptance of the settlement terms by the Panel of Whole Time Members and receipt of the settlement amount by SEBI, the instant proceedings initiated against the Applicant vide Show Cause Notice dated April 22, 2022, is disposed of, as per approved settlement terms mentioned above in terms of Section 15JB of SEBI Act read with Section 19 of SEBI Act read with Regulation 23(1) of the Settlement Regulations.”

Additionally, through a corrigendum, the SEBI modified the order by stating, “Pursuant to receipt of the above complaint, an investigation was carried out by SEBI to ascertain whether any of the entities mentioned in the said complaint have violated the provisions of SEBI (PFUTP) Regulations, 2003 and SEBI (Stock Broker and Sub Broker) Regulations, 1992. Pursuant to the investigation, it was observed that Pawan N Agarwal (hereinafter referred to as “Applicant”) had mirrored certain trades of Aequitas and thereby violated the provisions of Section 12(A)(c) of SEBI Act and Regulation 3(a), 3(d) and 4(1) of PFUTP Regulations.”