Description

SEBI final order under Sections 11 and 11B of SEBI Act, 1992 in the matter of front running by Ashish S Parekh and 12 other connected entities involving 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 other connected entities. The case originated from a preliminary examination report by NSE identifying suspected front running activities where Ashish S Parekh and connected entities were engaged in front running the trades of a big client, Mr. Paresh N Bhagat. The matter involves violations of SEBI (Prohibition of Fraudulent and Unfair Trade Practices) Regulations.

Key Points

  • SEBI received preliminary examination report from NSE regarding suspected front running by Ashish S Parekh and 10 connected entities
  • Total of 13 noticees involved: 9 Front Runners and 4 Information Carriers
  • Front running involved trading ahead of a big client’s (Mr. Paresh N Bhagat) orders using Non-Public Information (NPI)
  • Case involves violations of SEBI Act, 1992 provisions
  • Interim ex parte order and confirmatory order were issued during proceedings
  • Show Cause Notice was issued and hearings were conducted
  • Investigation findings established connections amongst big client, information carriers and front runners
  • Trading patterns of front runners demonstrated coordinated front running activity

Noticees Involved

Front Runners (Noticees 1-9):

  1. Ms. Dipa Ashish Parekh (PAN: AGMPP8210F)
  2. Ms. Kashmira Joshi (PAN: ADDPJ1194L)
  3. Mr. Nikhil Hirachand Jain (PAN: AJYPJ0048C)
  4. M/s. Nikhil Hirachand Jain HUF (PAN: AAHHN4833K)
  5. M/s Alpesh Hirachand Jain HUF (PAN: AAOHA6695P)
  6. M/s Nagendra S Dubey HUF (PAN: AAJHN3457M)
  7. Late Ms. Sushma Nagendra Dubey through legal heirs (PAN: AVUPD3218N)
  8. Mr. Abhay Dubey (PAN: AIQPD8367B)
  9. Ms. Jagruti Atul Pithadia (PAN: DNTPD6865B)
  10. Mr. Sahil Atul Pithadia (PAN: AXTPP8243L)

Information Carriers (Noticees 10-13):

  1. Mr. Ashish S Parekh (PAN: AGSPP1248F)
  2. Mr. Rajesh Joshi (PAN: ACBPJ6638A)
  3. Mr. Nagendra S Dubey (PAN: AIQPD8367B)
  4. Mr. Chirag Atul Pithadia (PAN: CAXPP0546B)

Regulatory Actions

  • Interim ex parte order issued to restrain trading activities
  • Confirmatory order issued following initial proceedings
  • Show Cause Notice issued to all 13 noticees
  • Investigation conducted into trading patterns and connections
  • Final order issued under SEBI Act provisions for enforcement

Violations Identified

  • Front running activities in violation of SEBI (Prohibition of Fraudulent and Unfair Trade Practices) Regulations
  • Misuse of Non-Public Information (NPI) regarding big client’s impending orders
  • Coordinated trading activities amongst connected entities
  • Information leakage from information carriers to front runners
  • Proceedings under Sub-sections (1), (4) and (4A) of Section 11 of SEBI Act, 1992
  • Proceedings under Sub-sections (1) and (2) of Section 11B of SEBI Act, 1992
  • Violations of SEBI (Prohibition of Fraudulent and Unfair Trade Practices) Regulations

Impact Assessment

This enforcement action demonstrates SEBI’s commitment to preventing market manipulation through front running activities. The case highlights:

  • Serious market integrity issues arising from front running
  • Regulatory vigilance in detecting coordinated fraudulent trading patterns
  • Importance of protecting non-public information about large client orders
  • Deterrent effect on potential violators of securities laws
  • Market confidence enhancement through enforcement actions against fraudulent practices

The order serves as a warning to market participants against engaging in front running and misusing privileged information, reinforcing the regulatory framework for fair and transparent securities markets.

Impact Justification

High-profile SEBI enforcement action involving front running, a serious market manipulation offense under Sections 11 and 11B of SEBI Act. Involves 13 noticees including front runners and information carriers, demonstrating regulatory crackdown on fraudulent trading practices.