Column : Legitimate fraud?
This story is interesting given the recent ruling of our Securities Appellate Tribunal (SAT), which held that front-running (a form of fraud) is illegal only if committed by an intermediary. In other words, front-running is legal if committed by a non-intermediary. The facts in brief were as follows: The portfolio manager of a foreign institutional investor (FII), who made investment decisions for the FII, before buying stocks for the FII bought those stocks in his personal account. Thereafter, the manager sold those shares through the exchange mechanism to the FII and made huge gains in the process. When one buys large quantities of shares over a period of time resulting in a large acquisition of shares, clearly the price
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