SEBI finds ₹2.11 crore profits from 363 front-running trades

This order addresses allegations of front-running, where certain individuals and entities allegedly traded ahead of orders placed by three family trusts (the 'Big Client') on the National Stock Exchange (NSE) between January 2021 and October 2022. SEBI examined whether these actions violated the SEBI Act and PFUTP Regulations.

Who it concerns: The order concerns Noticees 6 through 24 and 26 through 30, including individuals such as Shankar Tukaram Vadatkar, Sakshi Shankar Vadatkar, Chaitali Shah, Shah Swapnil Uday, Dipesh Mehta, Piyush Mehta, Hansraj Randhir Shah, Randhir Virji Shah, Pinakin Hansraj Shah, Punaiben Hansraj Shah, Raahul Hansraj Shah, Soniya Mahesh Bohra, Mahesh Bohra, Shailesh Nayak, Ankesh Mahendra Jain, and Dr Kumaraswami R Dussa, along with their respective Hindu Undivided Families (HUFs). It also references Noticees 1-5 and 25, whose proceedings were settled separately, and the 'Big Client' entities: Bharat Kanaiyalal Sheth Family Trust, Ravi Kanaiyalal Sheth Family Trust, and Arjun Discretionary Trust.

What SEBI found or ordered

• SEBI alleged violations of Sections 12A(a), (b), (c), and (e) of the SEBI Act and specific PFUTP Regulations.
• The investigation identified 424 instances of common trading days between the front-runners and the Big Client.
• SEBI noted that in 363 instances, the front-runners earned a square-off profit of Rs. 2.11 crores.
• The front-running pattern was identified as either Buy-Buy-Sell (BBS) or Sell-Sell-Buy (SSB).
• Proceedings against Noticees 1-5 and 25 were disposed of via a settlement order dated December 19, 2024, without admitting or denying allegations.
• The order discusses technical issues such as delay in issuing the Show Cause Notice and the non-provision of the Big Client's order and trade logs.

Also in the document

• The alleged front-running involved a significant financial scale, with profits of Rs. 2.11 crores identified in 363 instances.
• The 'Big Client' consisted of three specific family trusts trading through a partnership firm named Safe Enterprises.
• The alleged main front-runner (Noticee No. 2) was the proprietor of NJK Securities, a sub-broker of Angel One Limited.
• SEBI noted that in 319 out of 328 identified front-running instances, the first leg of the trade was placed before the Big Client's orders.