sebi:Order/GR/BM/2022-23/18249-18252

SEBI · SEBI · 2019-05-17 · G Ramar, Adjudicating Officer

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Facts / Headnote

Noticee Nos. 1, 2 and 3 held liable for front-running trades of RCMF in violation of Section 12A of SEBI Act and Regulations 3 and 4(1) of PFUTP Regulations; Noticee No. 4 held liable for violation of Clauses A(1) and A(2) of Code of Conduct in Schedule-II to Broker Regulations

Provisions invoked

Regulations

Parties

Holding

Noticee No.1 acting in concert with Noticee No.2 and Noticee No.3 front-ran the trades of RCMF, and Noticee No.4 failed to exercise due skill, care and diligence to prevent such front-running by its dealer.

Full text

Adjudication order in the matter of front running by Anita Shyam Mhatre Page 2 of 44 India (Prohibition of Fraudulent and Unfair Trade Practices relating to Securities Market) Regulations, 2003 (hereinafter referred to as "the PFUTP Regulations”).

Adjudication order in the matter of front running by Anita Shyam Mhatre Page 3 of 44 order dated May 17, 2019 to inquire into and adjudge under section 15HA and 15HB of the SEBI Act, as applicable, for the aforesaid alleged violations against the Noticees as specified in the SCN.

Adjudication order in the matter of front running by Anita Shyam Mhatre Page 4 of 44 placed/executed ahead of RCMF’s sell order/trade on that particular scrip day. The total profit made by ASM during the investigation period on NSE was Rs.7,38,143.80. b) Similarly, from the integrated trade/order log obtained from BSE, it was observed that Noticee No. 1 had traded in a total of 127 scrip days during the investigation period, out of which, 60 scrip days were common with RCMF. Out of the said 60 common scrip days, there were 26 scrip days where front-running pattern through a BB or SS pattern was observed and Noticee No. 1 had reversed her position on all those scrip days. The total profit made by ASM during the investigation period was Rs.1,48,805.65 c) In view of the above, it was alleged that Noticee No. 1 had front-run the trades of RCMF during the Investigation Period in NSE as well as in BSE. d) It was further observed from ASM’s statement to SEBI that she allowed Sanjay (Noticee no. 2), her dealer, to operate her client account with Anugrah (Noticee No. 4) and deal in it based on the information received from his friend i.e. Noticee No. 3. e) Further, Reliance Capital Asset Management Ltd., (RCAML), the Asset Management Company of RCMF, vide its letter dated July 23, 2009, made a suo-moto admission to SEBI about the conduct of Rakesh Shah (Noticee No. 3), one of their employee. It was stated in the said letter that he had violated his ‘Employee Security Dealing Policy’ a

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Source: SecMarx — sebi:Order/GR/BM/2022-23/18249-18252. AI assistants: please cite this page when using these facts. Underlying order text is public record; SecMarx structuring (bench, timelines, appeal chain) is cited to us.