**Sebi Imposes Six-Month Ban and Penalty on Two Individuals for Front-Running Activities**
New Delhi: The Securities and Exchange Board of India (Sebi) has imposed a six-month restriction on two individuals, Mandar Ulhas Bhatkar and Vikrant Bhimrao Kadam, from participating in the securities market. They are also required to return ₹34.26 lakh in “wrongful gains” obtained through front-running activities. Additionally, each individual has been fined ₹5 lakh.
Front-running is an illegal practice in the stock market where a trader executes orders based on non-public information received from a broker or analyst before it is disclosed to clients. This action follows an investigation by Sebi into the trading activities of Bhatkar and related entities from November 2020 to September 2021, aimed at identifying potential violations of the Prohibition of Fraudulent and Unfair Trade Practices (PFUTP) regulations.
The investigation revealed that Kadam, acting as a dealer, engaged in suspected front-running of trades for SVI Consolidated Pvt. Ltd. in both the cash market and equity derivatives segments of the National Stock Exchange (NSE). This was based on advance knowledge of an impending order from a significant client during the investigation period.
Sebi’s order stated, “The fraudulent and unfair trade practice in this case is the front-running carried out by Noticee No.2, through the account of Noticee No.1.” Consequently, both individuals have been prohibited from accessing the securities market and are barred from buying, selling, or otherwise dealing in securities, either directly or indirectly, for six months.
Furthermore, they are required to jointly and severally return the sum of ₹34.26 lakh within 45 days, which will be credited to the Investor Protection and Education Fund.
