Insiders using 'front entities' will be subject to more scrutiny by Sebi

Financial checks, new affordability index on the cards to check malpractices

Insiders who use front entities, such as drivers or domestic help, to benefit from price-sensitive information could find the going tough as the Securities and Exchange Board of India (Sebi) will soon introduce more checks.

Those who lend their names, trading accounts or execute trades on behalf of others will be subject to more scrutiny such as financial background checks. Sebi could soon deem trades by investors beyond their verifiable financial sources as fraudulent.

The market regulator also plans to revise the definition of “dealing in securities” to include those who assist or orchestrate dubious transactions.  

The move comes in the wake of