SEBI Orders 6 from Sarda Family to Disgorge Rs1.43 Crore

Front-running is a serious issue in financial markets, and the recent actions taken by SEBI against the Sarada family and their associates highlight the regulator’s commitment to maintaining fair and transparent trading practices. The six individuals involved in this front-running scheme were found to have illicitly gained Rs1.43 crore from their fraudulent activities and have been ordered to disgorge these gains, as well as pay penalties totaling Rs45 lakh. In addition, they have been barred from accessing the securities markets for one to two years.

SEBI’s investigation into this coordinated scheme, which spanned from January 2022 to June 2023, revealed that the accused individuals systematically engaged in front-running trades by using non-public information about the trades of big clients to gain an unfair advantage. By executing buy or sell orders based on this insider information, they were able to generate substantial profits, totaling over Rs1.43 crore in many cases.

The evidence against the involved parties was strengthened by digital forensics, call records, and bank statements, which showed clear communication and financial transactions related to the front-running activities. The investigation also uncovered specific trading patterns used by the front-runners, such as buy-buy-sell and sell-sell-buy sequences, to profit from anticipated price movements resulting from the big clients’ trades.

SEBI’s actions against the six individuals, including the imposition of penalties ranging from Rs5 lakh to Rs20 lakh, demonstrate the seriousness with which such fraudulent activities are regarded. By holding these individuals accountable and penalizing them for their actions, SEBI aims to deter future instances of front-running and maintain the integrity of India’s securities markets.