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 involved in fraudulent trading activities.

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 investigation was initiated based on a preliminary examination report from NSE regarding suspected front running activities where the noticees allegedly traded ahead of large orders placed by a big client (Mr. Paresh N Bhagat) using non-public information.

Key Points

  • SEBI received preliminary examination report from NSE regarding suspected front running by Mr. Ashish S Parekh and 10 connected entities
  • 13 noticees identified: 9 Front Runners (including Ms. Dipa Ashish Parekh, Ms. Kashmira Joshi, Mr. Nikhil Hirachand Jain, HUFs, and legal heirs of Late Ms. Sushma Nagendra Dubey) and 4 Information Carriers (including Mr. Ashish S Parekh, Mr. Rajesh Joshi, Mr. Nagendra S Dubey, and Mr. Chirag Atul Pithadia)
  • Front running involved trading ahead of big client orders using Non-Public Information (NPI)
  • Big Client identified as Mr. Paresh N Bhagat
  • SEBI conducted investigation for violations of SEBI Act, 1992 and SEBI (Prohibition of Fraudulent and Unfair Trade Practices) Regulations
  • Interim ex parte orders and confirmatory orders were issued during the proceedings
  • Show Cause Notice (SCN) was issued and hearings were conducted
  • Order details unlawful gains made by noticees and connections amongst big client, information carriers and front runners

Regulatory Changes

This is an enforcement order and does not introduce new regulatory changes. However, it reinforces SEBI’s strict stance on:

  • Front running activities in securities markets
  • Misuse of non-public information for trading advantages
  • Fraudulent and unfair trade practices
  • Market integrity violations

Compliance Requirements

  • Market participants must ensure strict compliance with insider trading and front running prohibitions
  • Information barriers must be maintained to prevent misuse of non-public information
  • Trading ahead of client orders using privileged information is strictly prohibited
  • Market intermediaries must implement robust surveillance systems to detect and prevent front running
  • Legal heirs of deceased noticees are also held accountable for violations

Important Dates

  • Order Reference: WTM/KV/IVD-2/ID18/31968/2025-26
  • Circular Date: January 16, 2026
  • Investigation Period: Related to trading patterns and front running activities (specific dates to be detailed in full order)

Impact Assessment

Market Impact: High - This enforcement action demonstrates SEBI’s commitment to maintaining market integrity and taking stringent action against fraudulent trading practices. The order involving 13 entities including HUFs and legal heirs sends a strong deterrent message to market participants.

Regulatory Impact: High - Establishes precedent for pursuing front running cases involving complex networks of connected entities. Shows SEBI’s ability to trace information flow from information carriers to front runners.

Investor Impact: Positive - Protects investor interests by ensuring fair markets and preventing manipulation through front running. Enhances confidence in market surveillance and enforcement mechanisms.

Operational Impact: Market participants need to strengthen internal controls, information barriers, and surveillance systems to detect and prevent front running and similar violations. The order spanning 102 pages indicates comprehensive investigation and detailed findings on trading patterns, connections, and unlawful gains.

Impact Justification

Major SEBI enforcement order involving front running violations by 13 entities. Sets precedent for market integrity and fraudulent trading practices. Involves interim ex parte orders and confirmatory orders.