Sebi bans 8 entities for front-running, Rs 4.82 crore in illegal gains impounded
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The Securities and Exchange Board of India (Sebi) has taken strict action against eight entities accused of front-running, a prohibited trading practice that exploits insider information for financial gain.
The regulator has barred the entities from participating in the securities market and has frozen illegal gains totaling Rs 4.82 crore.
Sebi’s investigation focused on the alleged front-running activities tied to trades of Gagandeep Consultancy Private Limited, a major client of the stockbroker Anvil Share & Stock Broking Private Limited. The probe covered a five-year period from September 2018 to September 2023, with the objective of identifying violations under the Prohibition of Fraudulent and Unfair Trade Practices (PFUTP) regulations.
According to Sebi’s findings, Ashish Kirti Kothari, his family members, and his Hindu Undivided Family (HUF) were at the center of the scheme. Insider information about the big client’s trades was passed to Kothari and his associates by Nirav Mahendra Sapani, a dealer working at Anvil Share & Stock Broking.
The scheme involved Kothari and his associates placing trades ahead of the client’s orders using confidential information provided by Sapani. The trades were executed through accounts held by Krishna Tukaram Kadam, which were also used to launder the profits. The unlawful gains were then distributed among the participants, including Sapani, who played a key role as the information carrier.
By engaging in these activities, the accused violated multiple provisions of the Sebi Act.
In its interim order, Sebi has prohibited the eight entities from buying, selling, or dealing in securities, directly or indirectly, until further notice. Additionally, the regulator has impounded Rs 4.82 crore, which represents the total illegal profits earned from the front-running scheme.
Sebi emphasised the seriousness of such fraudulent practices, which undermine market integrity and investor trust. The regulator’s decisive action reinforces its commitment to maintaining fairness and transparency in the securities market.
Further investigations are expected to determine additional consequences for the accused parties.
