Front-running case: Sebi bans two persons from securities market for 3 years; slaps Rs 77 lakh fine

New Delhi, Mar 26 (PTI) Sebi on Tuesday barred two individuals from the securities market for three years and imposed a penalty of over Rs 77 lakh on them for their involvement in front-running.

Front-running refers to an illegal practice in the stock market where an entity trades based on advanced information from a broker or analyst before the information has been made available to its clients.

Those restrained by the Securities and Exchange Board of India (Sebi) are -- Rohit Mankotia, who was employed in Radico NV Distilleries, and his mother Shila Devi.

Further, Mankotia was on deputation to Sapphire Intrex Ltd (Big Client) and his work is related to technical analysis of stocks for Sapphire. Sapphire is the promoter of Radico Khaitan Ltd (RKL) and held 33.95 per cent equity shares of RKL, as per Sebi order.

Additionally, the two persons have been directed to disgorge Rs 38.8 lakh within 45 days and the same will be credited into the Investor Protection and Education Fund (IPEF).

In its 65-page order, Sebi found that Mankotia while having access and possession of information about impending trades of the Big client, executed trades in NSE equity segment and NSE equity derivative segment from the account of his mother Shila Devi based on impending orders of the Big client.

Shila Devi aided and abetted Mankotia in implementation of such a scheme as she did not raise any objection to use of her account for the purpose of front running and accordingly, they committed fraud and violated the provisions of PFUTP Regulations.

This came after Sebi conducted an investigation into trading activities of the two individuals during the period from July 2021 to June 2022 (investigation period) to ascertain any violation under the PFUTP (Prohibition of Fraudulent and Unfair Trade Practices) rules. PTI SP HVA