Description

SEBI issues final order under Sections 11 and 11B of SEBI Act against 13 noticees for front running trades of a big client through information carriers and front runners.

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 revealed that front runners traded ahead of a big client (Mr. Paresh N Bhagat) based on non-public information (NPI) about the client’s impending orders, which was leaked through information carriers. The order involves 9 front runners and 4 information carriers who were found engaged in fraudulent and unfair trade practices.

Key Points

  • Total 13 noticees involved: 9 front runners (Dipa Ashish Parekh, Kashmira Joshi, Nikhil Hirachand Jain, Nikhil Hirachand Jain HUF, Alpesh Hirachand Jain HUF, Nagendra S Dubey HUF, Late Sushma Nagendra Dubey through legal heirs including Nagendra S Dubey, Abhay Dubey, Jagruti Atul Pithadia, and Sahil Atul Pithadia) and 4 information carriers (Ashish S Parekh, Rajesh Joshi, Nagendra S Dubey, and Chirag Atul Pithadia)
  • Investigation initiated based on NSE’s preliminary examination report regarding suspected front running activities
  • Front runners traded ahead of big client’s orders using non-public information about impending trades
  • Order issued under SEBI Act provisions relating to fraudulent and unfair trade practices
  • Case involves misuse of confidential trading information of a big client (Mr. Paresh N Bhagat)
  • Both interim ex parte order and confirmatory order were issued prior to this final order

Regulatory Changes

No new regulatory changes introduced. This order enforces existing provisions under:

  • Section 11(1), 11(4), and 11(4A) of SEBI Act, 1992
  • Section 11B(1) and 11B(2) of SEBI Act, 1992
  • Provisions relating to fraudulent and unfair trade practices in securities markets

Compliance Requirements

  • Market participants must not engage in front running activities
  • Confidential information about client orders must be protected and not misused
  • Information carriers (those with access to client trading information) must not leak non-public information
  • Front runners must not trade based on non-public information about impending large orders
  • All market participants must maintain integrity and prevent market manipulation
  • Entities must comply with directions issued in the final order (specific directions to be detailed in the complete order)

Important Dates

  • January 16, 2026: Date of final order issuance
  • Order reference: WTM/KV/IVD-2/ID18/31968/2025-26
  • Prior actions: Interim ex parte order and confirmatory order were issued before this final order

Impact Assessment

Market Impact: High - This enforcement action reinforces SEBI’s zero-tolerance approach to front running and market manipulation. The involvement of 13 entities in a coordinated front running scheme highlights the severity of the violation and sends a strong deterrent message to market participants.

Regulatory Impact: High - Demonstrates SEBI’s enhanced surveillance capabilities in detecting complex front running arrangements involving multiple information carriers and front runners. The action strengthens market integrity by holding both information leakers and beneficiaries accountable.

Investor Impact: Positive - Protects interests of large institutional clients and investors by ensuring their trading information remains confidential and is not exploited for unfair gains. Enhances investor confidence in market fairness.

Operational Impact: Market intermediaries and brokers need to strengthen internal controls, information barriers, and surveillance systems to prevent unauthorized access to and misuse of client trading information. Enhanced compliance monitoring required for detecting similar patterns.

Impact Justification

High-profile enforcement action against front running involving 13 entities, demonstrating SEBI's strict stance on market manipulation and misuse of non-public information. Sets precedent for similar cases.