Description

SEBI settles case against sales trader who front-ran Big Client (Societe Generale) trades through family members, resulting in wrongful gains of ₹1.23 crore during January 2022 to December 2023.

Summary

SEBI issued a settlement order (SO/PSD/2025-26/8433) against Atul Gopeshwar Chaturvedi, a sales trader at Antique Stock Broking Limited, for front-running trades of Big Client Societe Generale. During the investigation period from January 1, 2022 to December 8, 2023, Chaturvedi misused material non-public information about impending client trades, transmitting it to family members and friends who earned wrongful gains of ₹1,23,28,165. The settlement was approved without admission or denial of violations.

Key Points

  • Settlement application filed under SEBI (Settlement Proceedings) Regulations, 2018
  • Violations of Sections 12A(a), 12A(b), 12A(c) and 12A(e) of SEBI Act, 1992
  • Violations of PFUTP Regulations 3(a), (b), (c), (d), 4(1) and 4(2)(q) read with Regulation 2(1)(c)
  • 348 out of 350 identified front-running instances involved Chaturvedi as the sales trader
  • Wrongful gains to family members and friends: ₹1,23,28,165
  • Chaturvedi also front-ran trades using his brother-in-law’s trading account
  • Settlement approved by HPAC on July 3, 2025 and Panel of Whole Time Members in September

Regulatory Changes

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

  • SEBI Act, 1992 (Sections 12A)
  • SEBI (Prohibition of Fraudulent and Unfair Trade Practices relating to Securities Market) Regulations, 2003
  • SEBI (Settlement Proceedings) Regulations, 2018

Compliance Requirements

For Atul Gopeshwar Chaturvedi:

  • Pay monetary settlement amount of ₹96,00,000 (Rupees Ninety Six Lakhs)
  • Pay disgorgement of ₹1,48,15,631 (Rupees One Crore Forty Eight Lakhs Fifteen Thousand Six Hundred Thirty One)
  • Accept voluntary debarment from buying, selling or dealing in securities, either directly or indirectly, for 6 months from the date of settlement order
  • Settlement on “neither admit nor deny” basis

For Market Intermediaries:

  • Reinforces need for robust information barriers and surveillance mechanisms
  • Emphasizes compliance with insider trading and front-running prevention protocols
  • Highlights importance of monitoring sales traders with access to client order information

Important Dates

  • Investigation Period: January 1, 2022 to December 8, 2023
  • Internal Committee Meeting: May 9, 2025
  • Revised Settlement Terms Filed: May 28, 2025
  • HPAC Recommendation: July 3, 2025
  • Panel Approval: September 2025 (specific date not mentioned in excerpt)
  • 6-Month Debarment: Commences from date of settlement order

Impact Assessment

Market Impact: Medium - This case demonstrates SEBI’s vigilance in detecting and prosecuting front-running activities, particularly those involving intermediaries with access to material non-public information. The settlement reinforces market integrity standards.

Operational Impact: This order serves as a warning to sales traders and market intermediaries about misuse of client information. Brokerages should strengthen internal controls, implement stricter information barriers between client-facing staff and proprietary trading, and enhance surveillance systems to detect unusual trading patterns among employees and their associates.

Precedent Value: The settlement terms combining monetary penalties (₹96 lakhs), disgorgement (₹1.48 crore exceeding actual gains), and 6-month debarment establish a benchmark for similar front-running cases. The fact that 348 out of 350 instances involved the same sales trader highlights the systematic nature of the violation and effectiveness of SEBI’s pattern detection capabilities.

Impact Justification

Significant enforcement action demonstrating SEBI's approach to front-running cases. Important precedent for market intermediaries and compliance standards, though limited to individual misconduct rather than systemic market impact.