The Securities and Exchange Commission has charged four financial services firms for providing brokerage services to institutional investors in the United States. What is different about this group of charges is that these brokerage firms are based in India. The charges were around being registered with the SEC as required under the federal securities laws.

The four firms and fines came to more than $1.8 million and were, without having to admit or deny any of the charges, as follows:

• Ambit Capital Pvt. Ltd. agreed to pay disgorgement and prejudgment interest totaling $30,910.
• Edelweiss Financial Services Limited agreed to pay $568,347.
• JM Financial Institutional Securities Private Limited agreed to pay $443,545.
• Motilal Oswal Securities Limited agreed to pay $821,594.

Allegations and orders against these firms included sponsored conferences in the U.S., having employees travel regularly to meet with U.S. investors, trading securities of India-based issuers, and participating in securities offerings from Indian issuers to U.S. investors.

What makes this SEC action more unusual is that it is charging foreign firms. In the past, investors dealing with foreign firms were effectively out on their own and if problems arose it required involving international authorities.

It would seem likely that since India’s economy has seen its growth rates lower than the past that the losses in the Indian stock market may have had something to do with these charges. Each individual charge can be seen here.

JON C. OGG

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