SEBI Imposes Strict Measures in Front-Running Case, Bans Nine Entities and Confiscates Over ₹21 Crore

Mumbai, Dec 22 (NationPress) The Securities and Exchange Board of India (SEBI) has taken decisive action in a case of front-running by banning Sachin Bakul Dagli, the equity dealer of PNB Met Life Insurance Company, along with eight other entities from the stock market.

SEBI reported that Dagli and the eight entities engaged in front-running activities for over three years, accumulating illegal profits totaling ₹21.16 crore during this timeframe.

The market regulator has prohibited Dagli and these entities from trading in the stock market and has confiscated their illicit earnings.

Prior to this action, SEBI investigated suspicious front-running trades connected to PNB MetLife India Insurance.

The primary goal of this investigation was to ascertain whether these suspicious entities were involved in front-running the trades of PNB MetLife India Insurance with assistance from others, including dealers and fund managers, and to determine if there were any violations of SEBI regulations.

The investigation, conducted from January 1, 2021, to July 19, 2024, uncovered that most trading decisions at PNB MetLife were executed by Dagli.

Findings revealed that Dagli and his brother Tejas Dagli, an equity sales trader at Investec, had access to confidential, non-public information regarding upcoming trading decisions at both PNB MetLife and Investec.

This sensitive information was subsequently utilized to inform trading decisions and was shared with Sandeep Shambharkar, who executed front-running trades via the accounts of Dhanmata Realty Private Ltd (DRPL), Worthy Distributors Private Ltd (WDPL), and Pragnesh Sanghvi.

Directors of DRPL and WDPL, Arpan Kirtikumar Shah, Kabita Saha, and Jignesh Nikulbhai Dabhi, were also implicated in these activities.

SEBI disclosed that a total of 6,766 front-running trades were executed, leading to a profit of ₹21,15,78,005.

In a statement to IANS, PNB MetLife stated: "The company has fully cooperated with the authorities regarding this matter and expresses gratitude to SEBI for concluding its findings of fraud attributed to the named individual against PNB MetLife. We have undertaken disciplinary measures in accordance with our internal protocols."

"PNB MetLife is dedicated to maintaining the highest levels of corporate governance, transparency, and integrity," the company further emphasized.

Front-running is an illicit practice where a trader or broker gains insider information about a significant company or institution preparing to place a large order for a specific stock, allowing them to establish a position in that stock prior to the execution of the major order.

In such scenarios, when the large company's order is executed, the trader or broker capitalizes on the subsequent surge in the stock's price.