SEBI Bans 8 Entities from Securities Market

The Securities and Exchange Board of India (SEBI) has taken action against eight entities, barring them from participating in the securities market and seizing illicit gains amounting to ₹4.82 crore, which were allegedly obtained through front-running activities.

Front-running is an illegal stock market practice where traders execute transactions based on privileged information from a broker or analyst before it becomes publicly available.

SEBI's investigation focused on suspected front-running involving Gagandeep Consultancy Private Limited (a major client) by specific entities. The inquiry aimed to determine violations of the PFUTP (Prohibition of Fraudulent and Unfair Trade Practices) regulations, covering the period from September 2018 to September 2023.

According to SEBI's interim order, Ashish Kirti Kothari, along with his family members and Hindu Undivided Family (HUF), was implicated in front-running trades for the major client.

The investigation revealed that the client's trades were executed through stockbroker Nirav Mahendra Sapani, who was a dealer at Anvil Share & Stock Broking Private Limited. Sapani allegedly acted as the conduit for insider information, passing details of the client’s trades to Ashish Kothari and his associates. To carry out the front-running transactions, the accounts of Krishna Tukaram Kadam were reportedly used by Ashish and his network.

The illicit profits generated were distributed among those involved. The operation entailed front-runners—Ashish and his associates—placing trades ahead of the client’s orders using confidential information. Profits were then shared with Sapani, who facilitated the transactions, while Kadam’s accounts were utilized to execute and conceal the trades.

By engaging in such activities, the entities violated multiple provisions of the SEBI Act. Consequently, SEBI has prohibited these eight entities from dealing in securities, either directly or indirectly, until further notice. Furthermore, the regulator has ordered the impoundment of ₹4.82 crore, representing the unlawful gains, from the accused parties jointly and severally.