Four entities pay Rs 3 crore to settle front running trade case with Sebi

Four entities, including Maxgrow Fintrade, have settled with markets regulator Sebi a case concerning the suspected front-running of trades by paying nearly Rs 3 crore towards settlement charges and agreeing to comply with other conditions.

The other three entities that settled the case with the Securities and Exchange Board of India (Sebi) are Bhavin Pankaj Doshi, Nitesh Kumar Jain and Atish Shah.

Apart from the settlement amount, the Sebi's committee formulated other conditions to settle the case. These included disgorgement of 'unlawful gain' of Rs 85.12 lakh to be paid jointly and severally along with voluntary debarment for a period of six months from the securities market by each applicant.

The order came after entities filed an application with Sebi in May 2023 proposing to settle the suspected front-running activities by Maxgrow Fintrade and Bhavin Pankaj Doshi case through a settlement order "without admitting or denying the findings of fact".

"It is hereby ordered that the instant proceedings initiated against the Applicants vide Show Cause Notice dated April 11, 2023, are disposed of," Sebi said in its settlement order.

In its show cause notice, it was alleged that Maxgrow Fintrade and Doshi had front-run the trades of the Big Client. Moreover, Jain had allegedly acted as a tipper and Atish Shah had allegedly acted as an information carrier. Through such acts, the entities allegedly violated PFUTP (Prohibition of Fraudulent and Unfair Trade Practices) rules.

The notice was issued after Sebi received an alert concerning the suspected front-running of trades of Aditya Birla Mutual Fund or Big Client by Bhavin Pankaj Doshi and Maxgrow Fintrade. An investigation with respect to the suspected front-running of the trades of Aditya Birla Mutual Fund during the period from February 2021 to December 2021.

Apart from remitting the disgorgement amount, individually, Maxgrow Fintrade paid Rs 96.08 lakh towards the settlement amount, Jain remitted Rs 68.9 lakh, and Doshi and Shah paid Rs 62.4 lakh each to settle the matter.