Sebi Imposes Six-Month Ban And Rs 34.26 Lakh Disgorgement On Two Individuals For Front-Running Activities

Sebi Imposes Six-Month Ban and Rs 34.26 Lakh Disgorgement on Two Individuals for Front-Running Activities

The Securities and Exchange Board of India (Sebi) has imposed a six-month ban on two individuals, Mandar Ulhas Bhatkar and Vikrant Bhimrao Kadam, from accessing the securities market. They have also been directed to disgorge a total of Rs 34.26 lakh, representing the wrongful gains made through their involvement in front-running activities.

Additionally, Sebi has levied a penalty of Rs 5 lakh on each of the two individuals. Front-running is an illegal practice where an entity trade based on advanced, non-public information from a broker or analyst before the information is disclosed to clients. Sebi's investigation into the trading activities of Bhatkar and his associates during the period of November 2020 to September 2021 revealed instances of suspected front-running in the cash market and equity derivatives segments of the National Stock Exchange (NSE).

The investigation found that Kadam, acting as a dealer, executed trades based on inside information related to SVI Consolidated Pvt. Ltd. (a major client) in Bhatkar's trading account. Sebi's order confirmed that these trades constituted front-running, which violates the Prohibition of Fraudulent and Unfair Trade Practices (PFUTP) regulations.

As part of the sanctions, Sebi has prohibited both individuals from buying, selling, or dealing in securities, including mutual fund units, either directly or indirectly, for a period of six months. They have been instructed to jointly repay the wrongful gains of Rs 34.26 lakh to the Investor Protection and Education Fund within 45 days.