Sebi levies Rs 57 lakh fine on 6 entities for facilitating front running activities (2024)

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Capital markets regulator Sebi has imposed penalties totalling Rs 57 lakh on 6 entities for indulging in front-running in the trades of Sterling Group. In two separate orders, Sebi penalised -- Manish Chaturvedi, Laxmi Chaturvedi, Manohar Chaturvedi, Madhu Chanda, Anandilal Chanda and Anandilal Chanda HUF.

The order came after Sebi conducted an investigation after receiving multiple reports from the National Stock Exchange (NSE) of alleged front-running trading activities by certain entities in the shares of Sterling group for the period -- March 2009 to March 2011.

Front-running, which involves dealing in stocks based on insider knowledge of a future transaction, is considered one of the most serious offences by the Sebi.

The regulator observed that the entities -- Laxmi Chaturvedi, Anandilal Chanda and Anandilal Chanda HUF -- were front running the trades of the Sterling Group and its clients, while Manish Chaturvedi, Madhu Chanda and Manohar Chaturvedi had aided in the front running activities of the entities during the period of investigation.

Through such acts, they flouted the PFUTP (Prohibition of Fraudulent and Unfair Trade Practices) regulations.

Meanwhile, in another order, the regulator slapped penalties of Rs 36 lakh on 8 entities for violating the provisions of PFUTP norms and disclosure lapses.

The order came after Sebi conducted an investigation in the scrip of Camson Bio Technologies Ltd in connection with the alleged funding activities carried out by the company and its promoters for conversion of warrants to shares for the period January-June 2009.

The regulator found that the company, its directors and the preferential allottees had colluded with each other and had adopted a fraudulent device to defraud other shareholders of the firm by their involvement in the act of round-tripping of funds towards payment of consideration for the shares allotted on January 2009.

Separately, in another order, the regulator slapped a fine of Rs 5 lakh on Anil Kumar Gadodia HUF for indulging in non-genuine trades in illiquid stock options at BSE.

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