Sebi orders impounding of Rs 2.06 cr illegal gains in front-running case
In a 68-page order, the regulator also directed banks that no debits should be made, without its permission, in respect of the bank accounts held by the 11 entities.
A total amount of Rs 2,06,44,257 along with interest would be impounded, jointly and severally, from them. The entities are Vaibhav Dhadda, Alka Dhadda, Arushi Dhadda, Pramod Kumar Jain (HUF), Beena Jain, Aditya Barla, Sumit Kanungo, Prashant Jain, Pranay Vaid, Siddharth Jain and Riya Kanungo.
“… it prima facie appears that Alka Dhadda, Arushi Dhadda, Beena Jain and Pramod Kumar Jain (HUF) were acting not only in concert but also in connivance with Vaibhav Dhadda and others namely, Prashant Jain and Siddharth Jain under a premeditated plan to achieve the end objective of the scheme i.e. front running the trades of impending orders of Fidelity Group entities,” Sebi said on Monday.
In an interim order, passed in December 2019, the regulator had barred Vaibhav Dhadda, Alka Dhadda and Arushi Dhadda from the securities market till further directions. They were also asked to deposit unlawful gains worth over Rs 1.86 crore.
The latest order has come after a detailed probe into the alleged front-running activities.
Front-running, in market parlance, means buying or selling securities ahead of a large order so as to benefit from the subsequent price movements.
The detailed investigation has brought out that the total unlawful profits made by the front runners along with associated/connected entities was Rs 3,55,32,106.
“Considering the dubious conduct of the entities during Sebi’s investigation, it appears that the entities are likely to divert the wrongful gains made from the front running trades, if the same is not impounded immediately.
“… Non-interference by the regulator at this stage would therefore result in irreparable injury to the interests of the securities market and the investors,” Sebi said on Monday.
Among other directions passed on Monday, the entities have been asked not to dispose of or alienate any of their assets/properties/securities, till such time the amount is credited to an escrow account.
The entities have also been directed to file their replies within 30 days of receiving the order, wherein the regulator has asked them to showcause why suitable action should not be initiated against them.
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