Description

SEBI adjudication order imposing penalties on three individuals for 38 instances of front-running trades in Rajesh Exports Ltd on NSE during January–October 2023, yielding unlawful gains of Rs. 1.99 crore.

Summary

SEBI’s Adjudicating Officer issued Order No. Order/AK/DS/2026-27/32398-32400 against three individuals — Navnit Gadoya (Noticee 1), Chiranggi Irish Shah (Noticee 2), and Surbhi Aggarwal (Noticee 3) — for front-running the trades of institutional ‘Big Clients’ in shares of Rajesh Exports Ltd on NSE. The investigation covered the period January 1, 2023 to October 31, 2023, during which 38 alleged front-running instances were identified, resulting in unlawful profits of approximately Rs. 1.99 crore. Proceedings were initiated under Section 15-I of the SEBI Act, 1992, with penalties adjudged under Section 15A(a) for violation of Section 11C(3) of the SEBI Act.

Key Points

  • Three individuals charged: Navnit Gadoya (PAN: AQNPG4727F), Chiranggi Irish Shah (PAN: CACPS1824G), and Surbhi Aggarwal (PAN: BNIPA1542D)
  • 38 alleged front-running instances identified in the equity segment of NSE during January 1, 2023 – October 31, 2023
  • Scrip involved: Rajesh Exports Ltd; unlawful profit of Rs. 1.99 crore
  • Noticees traded through broker M/s. LFC Securities Pvt. Ltd.
  • Big Clients placed orders through Ventura Securities Ltd (via telephonic instructions to dealer Chandrakant Laxman Modak) and MIB Securities India Pvt. Ltd. (via Microsoft Teams chat; dealers Hardik Jayendra Jani and Rupesh Himatlal Sanghavi)
  • One Big Client is a Mauritius-based Foreign Portfolio Investor (FPI)
  • AO appointed December 1, 2025; Show Cause Notice issued December 30, 2025
  • Charges framed under Section 15A(a) for alleged violation of Section 11C(3) of the SEBI Act

Regulatory Changes

No new regulatory changes or policy amendments are introduced by this order. It is an enforcement action applying existing provisions of the SEBI Act, 1992 and SEBI (Procedure for Holding Inquiry and Imposing Penalties) Rules, 1995.

Compliance Requirements

  • Market intermediaries (brokers, dealers) must implement robust controls to prevent leakage of client order information to third parties
  • Dealers handling institutional orders must ensure information barriers are in place to prevent front-running
  • Entities receiving material non-public order information must not trade ahead of those orders
  • Brokers are required to cooperate fully with SEBI investigations under Section 11C(3) of the SEBI Act

Important Dates

  • January 1, 2023 – October 31, 2023: Investigation period covering the alleged front-running activity
  • December 1, 2025: Appointment of Adjudicating Officer
  • December 30, 2025: Show Cause Notice issued to the Noticees
  • April 2026: Adjudication order passed (Order/AK/DS/2026-27/32398-32400)

Impact Assessment

This order reinforces SEBI’s ongoing scrutiny of front-running activity involving institutional order flows. The case highlights vulnerabilities at broker terminals where dealers with access to large client orders can leak information — whether intentionally or inadvertently — to connected parties. The involvement of an FPI as a victim underscores that foreign institutional investors are also susceptible to such predatory practices. Market participants, particularly dealers and employees of brokerages handling bulk or institutional orders, should note that SEBI is actively monitoring trading patterns for front-running signals. The Rs. 1.99 crore profit figure and 38-instance count indicate a sustained and systematic pattern rather than an isolated incident, likely resulting in significant financial penalties for all three noticees.

Impact Justification

Front-running is a serious market integrity violation. The order covers 38 instances with Rs. 1.99 crore in unlawful gains across three individuals and multiple brokers. Impact is medium as it is confined to specific entities and a single scrip rather than systemic market changes.