Market regulator, the Securities and Exchange Board of India (SEBI), has barred Prijesh Kurani and several of his family members from the securities market in a front-running case involving the misuse of non-public information of a big client (BC) and unlawful gains of about ₹1.96 crore.
The
order names seven individuals, including: Prijesh Kurani, Navnit Gadoya, Bharati Navnit Gadoya, Rekha Arun Kurani, Dharini Kurani, Vilpa Vora, and Pranav Vora, for their roles in executing trades based on non-public information about a major client.
SEBI has directed Prijesh Kurani, Navnit Gadoya, Bharati Gadoya, Rekha Kurani, Dharini Kurani to jointly and severally disgorge the illegal gains along with simple interest at 12% per annum, calculated from 28 February 2023 (end of the investigation period) until the date of payment.
In addition, Prijesh Kurani and Pranav Vora have been fined ₹10 lakh each and barred from the securities market for periods ranging between one and three years
The issue stems from an investigation covering January 2022 to February 2023, during which SEBI examined suspicious trading activity ahead of large client orders. The regulator concluded that Mr Kurani was the key architect of the scheme, placing trades through accounts of close relatives to profit from anticipated price movements triggered by institutional trades.
According to SEBI, four family members, Navnit Gadoya, Bharati Gadoya, Rekha Kurani and Dharini Kurani, allowed their trading accounts to be used as ‘mule accounts’. These accounts were allegedly controlled by Mr Kurani to execute trades ahead of the big client’s transactions.
The investigation also revealed a crucial link at the intermediary level. Vilpa Vora, an authorised person associated with the brokerage handling the client’s trades, along with her husband Pranav Vora, acted as conduits of sensitive information. SEBI noted that Pranav Vora had access to confidential order details and passed these on to Mr Kurani, facilitating the front-running strategy.
Of the 188 profitable intra-day trades executed by the group, SEBI identified 95 instances that exhibited clear front-running. These trades accounted for a substantial portion of the unlawful gains of nearly ₹1.99 crore during the period under review.
SEBI observed that the trades followed classic front-running strategies such as ‘buy-buy-sell’ and ‘sell-sell-buy’, wherein positions were built ahead of large client orders and squared off after prices moved in the expected direction.
Rejecting the noticees’ contention that there was no direct evidence of information flow, SEBI held that circumstantial evidence, including trading patterns, close relationships, call records and access to trading systems, clearly established misuse of unpublished price-sensitive information. It reiterated that front-running constitutes a serious form of market abuse, conferring an unfair advantage and violating the PFUTP Regulations.
The regulator also noted that some noticees failed to adequately respond to the show-cause notice (SCN) or participate in the proceedings, prompting ex parte action in certain cases.
Concluding that the coordinated conduct of the individuals amounted to a fraudulent scheme, SEBI held them guilty of violating provisions of the SEBI Act and the PFUTP Regulations.
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