Description

SEBI imposes penalties on Sunny Bhatia, Surbhi Chopra Bhatia, Mamta Rani and Ashok Kumar for front running trades of Eastman Group during January 2019 to December 2022.

Summary

SEBI’s Adjudication Officer issued Order No. ORDER/AK/RK/2025-26/31707-31710 against four individuals - Sunny Bhatia (dealer), his wife Surbhi Chopra Bhatia, his mother Mamta Rani, and his father Ashok Kumar - for front running activities related to trades of Eastman Group (referred to as “Big Client”) during the investigation period of January 1, 2019 to December 31, 2022. The primary violator, Sunny Bhatia, allegedly used his position as dealer of the Big Client to front run trades through his own account and family members’ trading accounts.

Key Points

  • Investigation conducted into front running activities involving Eastman Group trades
  • Four noticees involved: Sunny Bhatia (PAN: AJLPB7728A), Surbhi Chopra Bhatia (PAN: ASOPC0887D), Mamta Rani (PAN: CEPPR5248A), and Ashok Kumar (PAN: DWOPK9147P)
  • Sunny Bhatia was the dealer of the Big Client (Eastman Group) and allegedly front ran their trades
  • Family members (wife, mother, father) allegedly allowed their trading accounts to be used for front running
  • Investigation period: January 1, 2019 to December 31, 2022
  • Show Cause Notice issued on February 12, 2025
  • Violations alleged under SEBI Act, 1992 and PFUTP Regulations, 2003
  • Adjudication proceedings initiated under Section 15-I and 15HA of SEBI Act

Regulatory Changes

No new regulatory changes introduced. This is an enforcement action under existing provisions of:

  • SEBI (Prohibition of Fraudulent And Unfair Trade Practices Relating to Securities Market) Regulations, 2003
  • Section 15-I and 15HA of SEBI Act, 1992
  • SEBI (Procedure for Holding Inquiry and Imposing Penalties) Rules, 1995

Compliance Requirements

  • Dealers and intermediaries must not engage in front running activities
  • Trading account holders must not allow their accounts to be misused by others for fraudulent trading
  • Intermediaries must maintain proper controls to prevent misuse of client information
  • Dealers must not exploit advance knowledge of client orders for personal gain

Important Dates

  • Investigation Period: January 1, 2019 to December 31, 2022
  • Adjudicating Officer Appointment: January 24, 2025
  • Show Cause Notice Issued: February 12, 2025
  • Extension Request: February 22, 2025
  • Document Inspection Provided: March 5, 2025
  • Reply Deadline Extended: March 12, 2025

Impact Assessment

This enforcement action demonstrates SEBI’s continued focus on detecting and penalizing front running violations, particularly those involving dealers who misuse client information. The case involves a systematic scheme where a dealer allegedly exploited his position over a 4-year period using multiple family accounts. While the direct market impact is limited to specific individuals and one client group (Eastman Group), it serves as a deterrent for similar violations and reinforces the importance of maintaining information barriers and ethical trading practices. The involvement of family members highlights SEBI’s approach of pursuing all parties who facilitate fraudulent trading activities.

Impact Justification

High severity enforcement action involving front running violations over 4-year period. Medium market impact as it involves specific individuals rather than broader market participants.