The Securities and Exchange Board of India () has imposed penalties on 13 individuals and entities for engaging in front-running trades based on non-public information related to a large investor referred to as the “Big Client.”
The regulator has levied fines ranging from ₹5 lakh to ₹15 lakh and barred the entities from accessing the securities market for one to three years.
According to SEBI’s investigation, the noticees had executed trades in the same scrips as the Big Client’s family trusts ahead of its large orders, earning unfair profits.
The regulator observed a sharp rise in their intraday and square-off profits during the investigation period, which dropped sharply after SEBI initiated queries with the Big Client in June 2022.
In an 82-page order, SEBI’s adjudicating officer Santosh Shukla noted the case represented “a classic example of the touch-me-not distancing through husband, using spouse’s account or HUF’s account and culminating in the final denouement wherein connected parties with all their manipulative assemblage came to the fore setting a seal on their machinations of fraudulent, manipulative and deceptive dealings for the benefit of those traders who traded or caused to be traded in the scrips based on the non-public information regarding impending orders of the Big Client.”
He said that several of the accused either allowed the key conspirator to use their accounts or traded on his advice, often through spouses’ or Hindu Undivided Family (HUF) accounts.
The highest penalty of ₹15 lakh was imposed on Chaitali Shah, followed by ₹12 lakh each on Shah Swapnil Uday HUF and Piyush Mehta HUF. Others, including Shankar Tukaram Vadatkar, Dipesh Mehta HUF, and Hansraj Randhir Shah HUF, were fined ₹10 lakh each. Remaining entities were penalised between ₹5 lakh and ₹8 lakh.
SEBI said the trading pattern among the noticees reflected clear coordination and misuse of confidential information, undermining market integrity and fairness. The restrained parties may square off open derivative positions within three months but cannot sell assets except to pay the penalties.