Market regulator Securities and Exchange Board of India (SEBI) has imposed a total penalty of ₹15 lakh on three people, Navnit Gadoya, Chiranggi Irish Shah and Surbhi Aggarwal, in a front-running case scheme that generated unlawful gains of nearly ₹1.99 crore.
The case pertains to 38 instances of alleged front-running in the equity segment of the National Stock Exchange (NSE) from January 2023 to October 2023. According to SEBI, the three placed trades ahead of large client orders in the shares of Rajesh Exports Ltd, thereby profiting from anticipated price movements.
SEBI investigation revealed that the three were closely connected through call records, financial transactions and shared technical identifiers such as internet protocol (IP) and media access control (MAC) addresses. These links indicated coordinated trading activity aimed at exploiting confidential order information of institutional clients.
The regulator noted that they executed trades through LFC Securities Pvt Ltd using internet-based trading facilities, while the large clients routed their orders through Ventura Securities Ltd and MIB Securities India Pvt Ltd. Orders from these clients were placed via dealer terminals based on telephonic instructions and electronic communications, creating an opportunity for misuse of non-public information.
Further analysis showed that the three were actively engaged in day trading across multiple scrips, earning total profits exceeding ₹6.07 crore during the investigation period. Of this, over ₹4.06 crore was generated from trading in Rajesh Exports alone. Importantly, profits specifically attributed to front-running in 30 instances amounted to ₹1.39 crore, representing a significant portion of their trading gains.
SEBI also observed non-cooperation from the three during the investigation. One of them failed to respond to information requests, while the others provided incomplete or misleading submissions and did not offer satisfactory clarifications when questioned further.
Despite being given an opportunity to respond to the show-cause notice (SCN) and attend a personal hearing, none of the noticees participated in the proceedings. SEBI held that principles of natural justice were duly followed before proceeding with the adjudication.
Based on its findings, SEBI held that the entities violated provisions of the SEBI Act relating to furnishing information and cooperation during investigations. Accordingly, penalties were imposed under Section 15A(a) of the Act.
SEBI levied a penalty of ₹5 lakh each on Navnit Gadoya, Chiranggi Irish Shah and Surbhi Aggarwal, aggregating to ₹15 lakh.
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