The has barred eight entities, including Ashok Maheshwari, from the securities market for up to four years and ordered disgorgement of ₹1.29 crore in unlawful gains in a front-running case involving trades of a portfolio manager.
In the final order, Ashok Maheshwari and Darshan Bakul Shah have been debarred for 48 months, including the period already served under the interim order. Khusboo Darshan Shah and Darshan Bakul Shah (HUF) have completed their 24-month market restraint, with no further debarment imposed.
Further, Benzer Department Stores Pvt. Ltd. and Mihir Dhirajalal Savla have been debarred for 24 months, while CHL Stock Concepts Pvt. Ltd. and Chirag Mahendra Shah have been debarred for 36 months. SEBI has also restrained Ashok Maheshwari, Darshan Bakul Shah, and Chirag Mahendra Shah from acting as directors or key managerial personnel in listed companies or SEBI-registered intermediaries for 2 years.
Whole-time member Amarjeet Singh said that the noticees “carried out a scheme of front running the trades of a Portfolio Management Service provider… to make unlawful gains,” during April 1, 2021 to May 31, 2022. SEBI said the entities traded in “common scrips… proximate to trades of the Big Client,” identified as Unifi Capital Pvt. Ltd., thereby exploiting advance knowledge of orders.
“Noticees 1 and 2 (along with other Noticees) collaborated to execute a carefully crafted scheme of front running the orders of the Big Client with the help of non-public information about substantial orders of the Big Client shared by Noticee 1 with Noticee 2 in return for an arrangement of sharing profits made out of such trades, which at its root was a fraudulent, manipulative, and an unfair trade practice,” Singh said in the 78 page order.
The regulator has directed the noticees to disgorge unlawful gains aggregating ₹1.29 crore along with simple interest at the rate of 12 percent per annum from May 31, 2022 till payment. The amount is to be credited to the Investor Protection and Education Fund within 45 days.
They have also been fined from ₹15 lakh to ₹25 lakh as penalties, totalling ₹1.52 crore. The noticees have been directed to pay penalties within 45 days. The order comes in continuation of SEBI’s interim action in April 2024 and comes into force with immediate effect.