Sebi revokes market ban on 7 entities in front running case

Sebi revokes market ban on 7 entities in front running case

Market regulator Sebi has lifted the market ban imposed on seven entities, which came under the scanner in a front-running case, involving some dealers of Reliance Securities and their connected entities.

It was alleged that the entities violated the provisions of PFUTP (Prohibition of Fraudulent and Unfair Trade Practices) norms.

“At this stage, there is no prima facie material available on record to indicate that the noticees (seven entities) indulged in fraudulent activities in the securities market,” Sebi said in an order passed on December 30.

Accordingly, the regulator has revoked the market ban imposed on them.

It further said the investigation in the matter is still in progress, which may bring out the omission or commission of these entities in the extant matter if any.

These seven entities are — Bharat C Parekh -HUF, Mansi V Shah, Pravin Somani, Bimal N Mehta, Jitendra M Shah-HUF, Sanjay J Shah- HUF and Shimoni S Shah.

Sebi, through an interim order in August, barred 27 entities, including these seven, from the capital market after it unearthed a major case of front running by some dealers of Reliance Securities and their connected entities by using their prior access to sell and buy orders by Tata Absolute Return Fund.

The entities were barred from accessing the capital markets until further directions.

The regulator had examined KYC details, call data records, social media posts and Facebook connections of the suspected individuals and entities to probe relationships between various entities under its scanner in the case, after Sebi’s own internal surveillance system-generated front running alerts against one particular individual Meena Ramnilal Vira in December 2019 and January 2020.

These alerts were referred to suspected front-running of trades of Tata Absolute Return Fund, a scheme of Tata Alternative Investment Fund.

According to Sebi, certain entities connected with the dealers of Reliance Securities were prima facie observed to have traded, depending on the impending orders of the Tata Absolute Return Fund, on numerous occasions during different time periods.

Subsequently, these connected entities squared off their positions when the orders of the fund were placed in the market. Thus, they were able to generate substantial proceeds for themselves by placing orders in anticipation of the price movement of scrips on account of a large buy or sell orders of the fund, Securities and Exchange Board of India noted.

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