Description

SEBI order against Chaturvedi Group entities for front running 350 trades of Societe Generale (FPI big client) using material non-public information transmitted by a sales trader at Antique Stock Broking Limited.

Summary

SEBI issued an order under Sections 11(1), 11(4), 11(4A), 11B(1), 11B(2), and 15HA of the SEBI Act, 1992 against four noticees — Vishvanath Goswami, Umang Chaturvedi, Shyam Chaturvedi, and Vinod Kumar Chaturvedi — for front running 350 trades of Societe Generale, a registered Foreign Portfolio Investor (FPI). The non-public information about impending trades was transmitted by Atul Chaturvedi, a sales trader at Antique Stock Broking Limited (the FPI’s broker), to the Chaturvedi Group front runners.

Key Points

  • Four individuals (Vishvanath Goswami, Umang Chaturvedi, Shyam Chaturvedi, Vinod Kumar Chaturvedi) are named as noticees
  • Front running involved 350 instances of trades of Societe Generale, a registered FPI
  • Information carrier was Atul Chaturvedi, a sales trader at Antique Stock Broking Limited
  • Atul Chaturvedi transmitted material non-public information about impending big client trades to the front runners
  • SEBI invoked anti-fraud provisions under Section 12A of the SEBI Act and Regulations 3 and 4 of the PFUTP Regulations
  • Regulation 4(2)(q) of PFUTP Regulations specifically covers front running acts
  • Order reference number: QJA/SS/IVD-2/ID19/32297/2025-26
  • The 77-page order covers investigation background, SCN, hearings, merits, findings, and final directions

Regulatory Changes

No new regulatory changes introduced. The order applies existing provisions:

  • Section 11(2)(e) of SEBI Act — prohibition of fraudulent and unfair trade practices
  • Section 12A of SEBI Act — anti-fraud prohibitions
  • Regulation 4(2)(q) of PFUTP Regulations, 2003 — specific prohibition on front running
  • Regulations 3 and 4 of PFUTP Regulations — general prohibition on manipulative, fraudulent, or unfair trade practices
  • Rule 5 of SEBI (Procedure for Holding Inquiry and Imposing Penalties) Rules, 1995

Compliance Requirements

  • Stock brokers must ensure sales traders and employees with access to client order information do not leak material non-public information
  • Entities connected to broker personnel must not trade ahead of large institutional orders
  • FPIs and institutional investors should be aware of front running risks at intermediary level
  • Brokers handling large FPI orders must maintain strict information barriers between front-office staff and connected persons

Important Dates

  • Order date: March 27, 2026
  • Case reference period: 350 front running instances reviewed during investigation
  • Order number: QJA/SS/IVD-2/ID19/32297/2025-26

Impact Assessment

This is a high-impact enforcement action targeting a systematic front running scheme at the broker level involving a major FPI. The case underscores SEBI’s continued scrutiny of intermediary conduct and information leakage by broker personnel with access to institutional order flows. The involvement of 350 trade instances and a registered FPI signals significant market integrity concerns. The order reinforces that front running is treated as a heinous fraud under Indian securities law, with penalties applicable under Section 15HA (monetary penalties) and directions under Section 11B (disgorgement, debarment). This case may prompt brokers to strengthen Chinese walls and surveillance around sales trading desks handling large institutional orders.

Impact Justification

Major enforcement order under multiple SEBI Act provisions involving systematic front running of 350 institutional trades using non-public information, affecting market integrity and FPI confidence.