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SEBI plans SIM-based authentication to curb unauthorized transactions in demat accounts
SEBI has proposed technology-based measures to create a secure trading environment and prevent unauthorized transactions in investors' trading and demat accounts. SEBI has proposed strengthening authentication by way of a SIM binding mechanism, i.e., One UCC-One Device-One SIM, similar to that of UPI payment applications, where the UPI application recognizes SIM along with mobile device and bank account details for carrying out UPI transactions. Comments may be submitted by 11.03.2025.
IFSCA issues Fund Management Regulations, 2025; mandates registration for Fund Managers before operations in IFSC
The IFSC Authority has notified the IFSCA (Fund Management) Regulations, 2025, requiring all entities undertaking fund management in an IFSC to obtain registration before commencing operations. The applicant must demonstrate a sound track record and maintain a reputation for fairness and integrity in business transactions. Further, The applicant shall have a sound track record and general reputation of fairness and integrity in all its business transactions.
SEBI directs stock brokers to disgorge unlawful gains made by using non-public information in violation of PFUTP norms
In the instant case, a big client was a US-based fund house with various funds registered as Foreign Portfolio Investors with the SEBI. Traders of big clients used to discuss trade-related information with ‘RS’, a Singapore-based trader (noticee no. 1), to ensure counter parties for their trading, and thus, ‘RS’ allegedly had access to non-public information (NPI) with respect to substantial impending transaction of big client.
Noticee no. 1, along with noticee no. 2 i.e. ‘KP’ (whom SEBI had debarred from the stock market) devised a scheme where ‘KP’ was obtaining NPI about impending orders of big clients from ‘RS’, who then instructed other noticees, i.e. front runners (FRs) to take counter positions to match with the position of a big client.
This would lead to FRs either squaring off of their initial position taken in scrip or creating excess long or short position in scrip, which they eventually square off during day and thus generated huge illegal gains in a short span of time.
SEBI observed that from WhatsApp data available on devices found during search and seizure operation at the premises of all noticees, statements made by FRs/facilitators and analysis of bank statements of various entities, it was gathered that there were numerous fund transfers, both through cash and bank transfers, between noticees, indicating profit-sharing from fraudulent activities.
SEBI held that the trades executed by all noticees were found to be in violation of section 12A of the SEBI and regulations 3 and 4 of the SEBI (Prohibition of Fraudulent and Unfair Trade Practice Relating to Securities Market) Regulations, 2003. Consequently, noticees were prohibited from accessing the securities market and directed to deposit total unlawful gains amounting to approximately INR 65.77 crores.
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