It was also observed that these individualswere front running the trades of IIFL Asset Management and several alternative investment fund schemes under IIFL Wealth Management.
IIFL Wealth is part of India Infoline Group.
The regulator examined KYC details, call data records, bank statements of the suspected individuals to probe relationships between various individuals under its scanner in the case, after Sebi’s own internal surveillance system generated front running alerts against Virendra Pratap Singh and Neha Virendra Singh between December 2019 and March 2020.
In its interim order, Sebi said the trading pattern showed deployment of BBS (Buy-Buy-Sell) or SSB (Sell-Sell-Buy) strategies — two typical modes of front running under which front runners place buy or sell orders just before the final buy or sell order of the big client and then place sell or buy orders, respectively, after the price of the stock has risen or fallen following execution of the final order by the big client.
Big client refers to IIFL Asset Management and alternative investment fund schemes.
Sebi found that Santosh Brijraj Singh, a dealer of IIFL group entities, after becoming privy to the non-public information of the impending orders of the big clients communicates the same, directly or indirectly, to his connected entity Adil Gulam Suthar.
Subsequently, both of them used the mule account sets to carry out the front running trades.Further,they have also earned significant profits to the tune of Rs 58 lakh while front running the trades.
It further said Santosh B Singh and Adil Gulam Suthar have placed orders from thetrading accounts of the mule account holders– Virendra Pratap Singh, Neha Virendra Singh, Gulammohammed Gulamabbas Shaikh and Mohammedidrish A Shaikh.
Once the proceeds are credited into the bank accounts of the four front runners by Santosh B Singh, Adil Gulam Suthar withdraw the same in cash from an ATM within a few days from the credit, Sebi said in its 66-page order.
Following the bank account statements of these entities, it was found that cash deposits were made in the front running bank accounts to undertake the front running activity.
Subsequently, the proceeds generated from such activity have been withdrawn in cash through ATMs in order to circumvent the audit trail.
By indulging in such activities, they violated the provisions of PFUTP norms (Prohibition of Fraudulent and Unfair Trade Practices).
Accordingly, Sebi in an order on Thursday barred the six individuals from ” buying, selling or dealing in the securities market or associating themselves with the securities market, either directly or indirectly, in any manner whatsoever till further directions”.
Besides, the regulator has put several other restrictions on them.