market regulator SEBI banned 8 companies from the securities market on Monday. Also seized an amount of Rs 4.82 crore earned from ‘front-running’ activities. ‘Front-running’ refers to the illegal practice in the stock market where an entity makes transactions based on non-public information received from a broker or analyst. The Securities and Exchange Board of India (SEBI) has taken this action after investigating alleged front-running of deals of Gagandeep Consultancy Pvt Ltd (large clients) by certain entities. In its interim order, SEBI found that Ashish Kirti Kothari, his family members and their HUF (Hindu Undivided Family) are accused of front-running the trades of big clients.
This is how the broker was caught
During investigation, SEBI found that the big client was placing his orders through stock broker Nirav Mahendra Sapani, who was working as a dealer at Anvil Share & Stock Broking Pvt. Ltd. Sapani acted as a messenger of information. Gave inside information about trades of a big client to Ashish and his associates. Krishna Tukaram Kadam’s accounts were used by Ashish Kirti Kothari and others to carry out front-running trades. The ill-gotten gains were shared between the parties involved. The modus operandi was to have the front-runners – Ashish and his associates – trade on the basis of confidential information ahead of orders from big clients. They shared the profits with Sapani, who helped facilitate the trades, and Kadam’s accounts were used to execute these trades and share the profits. By indulging in such trades, the entities violated several provisions of the SEBI Act. Accordingly, SEBI has barred these eight entities from buying, selling or dealing in securities in any way, directly or indirectly, until further orders.
Period of investigation 2018 to September, 2023
The period of SEBI’s investigation was from September 2018 to September 2023. SEBI, in its interim order, said Ashish Kirti Kothari, his family members and their HUF (Hindu Undivided Family) are accused of carrying out front-running deals of big clients. SEBI said that by indulging in such deals these entities violated several provisions of the SEBI Act. Therefore, eight entities have been barred from buying, selling or dealing in securities till further orders.
Latest Business News