Sebi bars Madhav Stock Vision, five others for alleged front-running

The Securities and Exchange Board of India (Sebi) on Wednesday debarred stock broker Madhav Stock Vision (MSVPL) and five other individuals from dealing in securities for allegedly front-running trades of a big client.

 

MSVPL has been restrained from buying, selling or dealing in securities in its proprietary account.

 

In the interim order, the regulator has also directed disgorgement of Rs 2.73 crore illegal gains. The five individuals were directors and dealers with Madhav Stock Vision and other brokers.

 

Sebi’s findings show that the trades of the big client placed through four brokers were front-run by MSVPL.

 

The market regulator’s findings show that the individuals ‘eavesdropped’ on the conversation of dealers on non-public information. 

 

As they were operating from the same premises and given the proximity of the trading terminals or dealing desks of four stock brokers, the perpetrators received information on the trades of the big client. These individuals further passed on the information to the front-runners.

 

Front-running refers to taking positions in the securities ahead of a deal or transaction by an institutional player based on non-public information and thus garnering profits.

 

The regulator had conducted the inspection for the period from April 2020 to December 2023.