Description

SEBI final order under sections 11 and 11B of SEBI Act 1992 against Ashish S Parekh and 12 other entities for front running trades of a big client.

Summary

SEBI has issued a final order under sub-sections (1), (4) and (4A) of Section 11 and sub-sections (1) and (2) of Section 11B of the SEBI Act, 1992 in the matter of front running by Ashish S Parekh and 12 connected entities. The investigation was initiated based on a preliminary examination report from NSE regarding suspected front running of trades of Mr. Paresh N Bhagat (referred to as “Big Client”). The matter involves 9 front runners and 4 information carriers who allegedly engaged in fraudulent trading practices using non-public information (NPI) about the big client’s impending orders.

Key Points

  • Total of 13 noticees involved: 9 front runners (including Ms. Dipa Ashish Parekh, Ms. Kashmira Joshi, Mr. Nikhil Hirachand Jain, Nikhil Hirachand Jain HUF, Alpesh Hirachand Jain HUF, Nagendra S Dubey HUF, Late Ms. Sushma Nagendra Dubey through legal heirs, Ms. Jagruti Atul Pithadia, Mr. Sahil Atul Pithadia) and 4 information carriers (Mr. Ashish S Parekh, Mr. Rajesh Joshi, Mr. Nagendra S Dubey, Mr. Chirag Atul Pithadia)
  • Investigation initiated based on NSE’s preliminary examination report
  • Alleged front running of trades of big client Mr. Paresh N Bhagat
  • Use of non-public information (NPI) regarding impending orders
  • Interim ex parte order and confirmatory order were issued during proceedings
  • Show Cause Notice (SCN) issued and hearings conducted
  • Matter involves violations of SEBI Act 1992 and SEBI (Prohibition of Fraudulent practices) regulations

Regulatory Changes

No new regulatory changes introduced. This is an enforcement action under existing provisions of SEBI Act, 1992 and SEBI (Prohibition of Fraudulent and Unfair Trade Practices relating to Securities Market) Regulations.

Compliance Requirements

  • All market participants must refrain from front running activities
  • Prohibition on trading based on non-public information about client orders
  • Information barriers must be maintained between different functions to prevent misuse of confidential trading information
  • Market intermediaries must ensure robust compliance systems to detect and prevent front running
  • Connected entities and family members must not trade based on privileged information accessed through their relationships

Important Dates

  • Order reference: WTM/KV/IVD-2/ID18/31968/2025-26
  • Circular publication date: January 16, 2026
  • Investigation period details to be found in complete order document (102 pages total)

Impact Assessment

Market Integrity Impact: High - Front running undermines fair and transparent price discovery, damages investor confidence, and violates fiduciary duties. This enforcement action demonstrates SEBI’s commitment to detecting and penalizing such manipulative practices.

Regulatory Impact: Serves as a strong deterrent against front running activities and reinforces the importance of maintaining confidentiality of client order information.

Operational Impact: Market participants, especially those with access to client order information, must strengthen internal controls, surveillance systems, and compliance frameworks to prevent similar violations.

Investor Protection: Protects interests of genuine investors whose orders may be adversely impacted by front running activities. The order includes determination of unlawful gains and specific directions against violators.

Impact Justification

High-profile enforcement action involving front running and fraudulent trading practices affecting market integrity. Final order with unlawful gains determination and directions against 13 entities including information carriers and front runners.