SEBI fines six entities for front running Sterling Group trades

1 Jun 2022

The Securities and Exchange Board of India, on Tuesday, levied a fine of 3 mln rupees against an employee of Sterling Group and two of his family members in a front running case pertaining to trades carried out by them during 2010-2011.

SEBI held that Manish Chaturvedi and his family members made an unlawful profit 81.9 mln rupees by orchestrating the front running in trades Sterling Group trades by getting a few traders to execute trades ahead of the corporate group.

SEBI had, in December 2020, ordered Chaturvedi and his family members to disgorge 189.9 mln rupees, including interest of 105.7 mln rupees, towards the illegal gains made from the front running operation.

In the same matter, SEBI, on Tuesday, also fined Madhu Chanda, a dealer who was associated with brokerage firm, Sharekhan, during the period in question, and her two family entities 2.5 mln rupees. SEBI said they made unlawful gains of nearly 4 mln rupees from their front running trades.

Chanda and her family members were, in December 2020, directed by SEBI to disgorge 9.1 mln rupees, including interest of 5.1 mln rupees.

SEBI’s enforcement in front running cases is based on the premise that it is a fraud against the securities market as a whole and not only against the specific entity whose trades have been front run.

Front running is specifically barred under SEBI’s prohibition of fraudulent and unfair trade practices.