SEBI imposed heavy fine on these 9 companies in ‘front running’ case, confiscated illegal earnings of Rs 21 crore

Capital market regulator SEBI has busted a ‘front-running’ scheme involving PNB MetLife India Insurance Company’s equity dealer Sachin Bakul Dagli and eight other entities. These people had earned illegal profits of Rs 21.16 crore through this scheme. Let us tell you that ‘front running’ means making transactions in the stock market and earning profits on the basis of advance information. This information is not available to the customers till that time. Front-running by these entities continued for more than three years. SEBI on Friday banned Sachin Bakul Dagli and eight other entities from the securities market through an interim order and confiscated the illegal profits earned by them.

Found guilty in SEBI investigation 

SEBI had conducted an investigation into suspected front running of transactions of PNB MetLife India Insurance Company Limited of large clients by certain entities. The purpose of the investigation was to ascertain whether the suspected entities had indulged in front running of transactions of large clients in collusion with others, including dealers and/or fund managers, thereby violating SEBI’s PFUTP (Prohibition of Fraudulent and Unfair Trade Practices) Regulations and the provisions of the SEBI Act. The period of investigation was from January 1, 2021 to July 19, 2024. In its investigation, SEBI found that decisions related to most of the transactions at PNB MetLife were delegated to Sachin Dagli for execution. The regulator found that Sachin Bakul Dagli (Equity Dealer, PNB MetLife) and his brother Tejas Dagli (Equity Sales Trader, Investec) obtained confidential, non-public information about upcoming orders of institutional clients of PNB MetLife and Investec. He used this information to carry out transactions and shared it with Sandeep Shambharkar, who executed front running transactions through the accounts of Dhanmata Realty Pvt Ltd (DRPL), Worthy Distributors Pvt Ltd (WDPL) and Pragnesh Sanghvi. 

6,766 front running cases reported

Directors of DRPL and WDPL, including Arpan Kirtikumar Shah, Kavita Saha and Jignesh Nikulbhai Dabhi, also took advantage of this scheme. These people colluded to create and execute a fraudulent front-running scheme in violation of SEBI Act and Fraudulent and Unfair Trade Practices (PFUTP) Regulations and earned illegal profits through it. SEBI said that 6,766 such front running cases were detected through the accounts of DRPL, WDPL and Pragnesh Sanghvi. These entities earned illegal profits of Rs 21,15,78,005 through this. SEBI said that the series of front running activities in the accounts of these entities continued for a long time i.e. more than three years. SEBI has banned these entities from buying and selling shares directly or indirectly till further orders.