Sebi on Monday imposed a fine of Rs 35 lakh on an individual for facilitating a fraudulent scheme of front-running activities in the securities market
Sebi. File photo.
Sebi on Monday imposed a fine of Rs 35 lakh on an individual for facilitating a fraudulent scheme of front-running activities in the securities market and for failing to comply with the regulator’s earlier directions. The individual, Praveen Kumar Jain, had provided six trading accounts to an employee of Sterling Group, Manish Chaturvedi, who indulged in frontrunning, according to the watchdog.
Sebi noted that Chaturvedi was in the knowledge of investments and the impending orders of the Sterling Group, and was also placing orders with stockbrokers on behalf of the company. Based on the knowledge of orders of the Sterling Group, Chaturvedi was front-running their trades by placing orders in the accounts of seven entities, it added.
Through an interim order in July 2015, Sebi had directed the front-runners to deposit the ill-gotten gains in an escrow account. Sebi also noted that Jain, by providing trading accounts to Chaturvedi, dealt in securities in contravention of directions issued by it wherein he was prohibited from dealing in the securities market.
“It is also evident that the noticee (Praveen Kumar Jain) transferred the amount of profits earned in such accounts to Manish, thereby the noticee was a part of the scheme of frontrunning by Manish and other frontrunners. The said act of the noticee resulted in fraud on investors in the securities market,” Sebi said.
For the violations, the regulator imposed a fine of Rs 35 lakh on the noticee.