SEBI impounds ₹125.25 lakh in front-running case

This is a final order by SEBI regarding suspected front running of trades by Mr. Ashish S Parekh and connected entities, where they allegedly used non-public information about a 'Big Client's' impending orders to place their own trades for profit.

Who it concerns: The order concerns 13 noticees: Front Runners (Ms. Dipa Ashish Parekh, Ms. Kashmira Joshi, Mr. Nikhil Hirachand Jain, M/s. Nikhil Hirachand Jain HUF, M/s Alpesh Hirachand Jain HUF, M/s Nagendra S Dubey HUF, Late Ms. Sushma Nagendra Dubey through her legal heirs, Ms. Jagruti Atul Pithadia, Mr. Sahil Atul Pithadia) and Information Carriers (Mr. Ashish S Parekh, Mr. Rajesh Joshi, Mr. Nagendra S Dubey, Mr. Chirag Atul Pithadia). It also involves the Big Client, Mr. Paresh N Bhagat, and the broker Mangal Keshav Financial Services LLP (MKFS).

What SEBI found or ordered

• SEBI found that the noticees engaged in front running the trades of the Big Client (Mr. Paresh N Bhagat) during the period from April 1, 2021, to December 31, 2021.
• SEBI identified a pattern of Buy-Buy-Sell and Sell-Sell-Buy orders typical of front running activity.
• SEBI determined that Information Carriers (dealers at MKFS) passed non-public information to Front Runners who placed orders before the Big Client's orders.
• An Interim Order dated December 26, 2022, restrained the noticees from buying, selling, or dealing in securities.
• SEBI directed the impounding of INR 125.25 lakhs as illegal gains, which was deposited into an escrow account by the noticees.
• SEBI directed banks and depositories to freeze accounts and prevent transfers of securities or mutual fund units for the noticees.
• The order is a Final Order under Section 11 and 11B of the SEBI Act, 1992, and the PFUTP Regulations, 2003.

Also in the document

• The amount of INR 125.25 lakhs was impounded as illegal gains based on prima facie findings in the interim order.
• The investigation covered both equity and derivative segments.
• Two additional entities (Ms. Kashmira Joshi and Mr. Rajesh Joshi) were added during the investigation phase beyond those in the initial interim order.
• The order notes that the trading decisions for one of the front runners (Ms. Dipa Ashish Parekh) were taken by her husband (Mr. Ashish S Parekh), who was an Information Carrier.