In a major crackdown to arrest front-running based on insider information, Sebi has asked Rajeev Kasat, a dealer with UTI Securities, and Rajeev Shroff, a sub-broker with Emkay Shares & Stock Brokers, not to buy, sell or deal in securities for alleged insider trading.
The regulator has also directed 33 entities to cease and desist from trading activity directly or indirectly until further orders. These entities were found trading in the Ballarpur Industries Ltd (Bilt) counter, where a Sebi registered FII offloaded a major chunk of its holding (60.04 lakh shares) in November 2006 to June 2007. These entities would take a short position before the FII?s order was placed on the system and cover the short position as soon as the FII?s sale order was through at a lower price on Bilt shares. By resorting to this practice, these entities gained Rs 65.25 lakh, the Sebi order said.
In a 23-page order issued late on Monday evening, Sebi whole time member G Anantharaman said all 33 clients would deposit the profits made by them with the NSE within 15 days from the date of issue of the order. ?NSE shall keep this amount in their custody till further directions from Sebi.?
Sebi also asked UTI Securities Ltd and Emkay Shares & Stock Brokers to conduct an internal enquiry into the matter to initiate appropriate action against employees or agents named in the order. Sebi said, prima facie, there appeared to be a clear pattern in which Rajeev Kasat was seen to be passing information to Manish Innani at Prayas Securities Ltd and Rajeev Shroff. Innani has dealt in his individual account to garner illegal profits by using confidential information.
Further, Sebi said, ?Rajeev Shroff in turn appears to have used the information from Kasat to set up a group of clients including entities apparently connected to him that have participated in what appears to be ?customised front-running?.?