SEBI Fines Two Firms ₹3.7 Crore for Manipulating Closing Auction Session

The Securities and Exchange Board of India (SEBI) has taken swift action against Copthall Mauritius Investment Limited and Mansi Share and Stock Broking Private Limited, imposing a combined fine of ₹3.7 crore for alleged manipulation of the Closing Auction Session (CAS). The incident occurred on August 13, 2026, which was also the expiry day for Sensex derivatives, a detail that SEBI highlighted as crucial in its findings. The CAS is a relatively new mechanism, introduced on August 3, 2026, designed to determine the closing prices of stocks through an auction process, aiming to enhance price discovery and align Indian markets with global standards. However, SEBI's surveillance system flagged unusual and sharp movements in the Sensex index during the CAS on August 13, identifying three significant upward spikes that cumulatively lasted for 42 seconds. These spikes were attributed to the aggressive trading strategies employed by Copthall Mauritius Investment and Mansi Share and Stock Broking. Copthall Mauritius Investment, identified as a unit of JPMorgan Chase & Co., allegedly placed large buy orders across Sensex constituent stocks, with orders often exceeding 85% of the total buy-order value and placed at prices around 3% above the reference price. Simultaneously, Mansi Share and Stock Broking reportedly placed large sell orders across several Sensex stocks, also near the permissible deviation limits, before subsequently cancelling a significant portion of these orders. SEBI noted that these aggressive buy and sell orders, followed by cancellations, were designed to manipulate the Indicative Equilibrium Price (IEP) of the Sensex. The regulator's preliminary findings suggest that these actions were not for genuine trade execution but to influence the closing price of the Sensex and benefit existing derivatives positions, potentially preventing losses or generating wrongful profits on options contracts that might have otherwise expired worthless. As a result of this alleged manipulation, SEBI has ordered the impounding of wrongful gains totaling approximately ₹3.68 crore. Copthall Mauritius Investment is estimated to have made illegal gains of ₹2.96 crore, while Mansi Share and Stock Broking allegedly profited by ₹71.65 lakh. In addition to the financial penalties, both entities have been barred from accessing the securities market and participating in the CAS in the equity segment, either directly or indirectly, until further notice. For Mansi Share and Stock Broking, this ban specifically applies to its proprietary trading account. SEBI has also directed banks to freeze the entities' accounts to ensure the impounded amounts are secured, with funds to be placed in fixed deposits under a lien to SEBI. SEBI Chairman Tuhin Kanta Pandey had issued a stern warning against any attempts to manipulate the CAS just hours before the order was passed, emphasizing the regulator's capability to detect such activities under the new system, which he believes is more effective than the previous Volume Weighted Average Price (VWAP) method. This action marks the first enforcement case by SEBI concerning the CAS, highlighting the regulator's commitment to maintaining market integrity and fair price discovery, especially around critical trading periods like expiry days. The investigation into the matter is ongoing.

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