SEBI bans 8 entities from securities market

New Delhi:

Regulator Sebi on Monday barred eight entities from the securities market and recovered illegal profits of Rs 4.82 crore from their alleged running activities.

Front-running refers to an illegal practice in the stock market, where an entity is traded based on advanced information from a broker or analyst before it is made public.

Following the findings the Securities and Exchange Board of India (SEBI) conducted an investigation regarding alleged front-running of trades of Gagandeep Consultancy Pvt Ltd (Big Client) by certain entities.

The focus of the investigation was to detect violations of the provisions of PFUTP (Prohibition of Fraudulent and Unfair Trade Practices) by the entities and the period of investigation was from September 2018 to September 2023.

In its interim order, SEBI found that Ashish Kirti Kothari, his family members, and their HUF (Hindu Undivided Family) were accused of running big client front trades.

During investigation, the regulator noticed that the big client was placing his orders through stock broker, Nirav Mahendra Sapni, who was working as a dealer at Anvil Share & Stock Broking Pvt. Ltd.

Sapni acted as an information carrier, passing on information about trades of a big client to Ashish and his associates. The accounts of Krishna Tukaram Kadam were used by Ashish Kirti Kothari and others to conduct front running trades.

The ill-gotten gains were shared between the parties involved.

The modus operandi of the operation involved the front-runner—Ashish and his associates—placing trades ahead of large client orders based on confidential information. He shared the profits with Sapni, who helped facilitate the trades, and Kadam’s accounts were used to execute these trades and launder the profits.

By indulging in such trades, the entities violated several provisions of the SEBI Act.

Accordingly, SEBI has restrained these eight entities from buying, selling or dealing in securities, directly or indirectly, in any manner until further orders.

Additionally, “an amount of Rs 4.82 crore, being the total unlawful gain earned from the alleged front-running activities, is jointly and severally, from the notice,”.