The capital markets regulator Securities and Exchange Board of India (Sebi) has imposed a penalty on Nirmala Devi (name changed) and her son Vijay (name changed) for front-running activities.
The case pertains to the trading activities from July 1, 2021, to June 30, 2022.
Who is Nirmala Devi and what does this issue entail?
A Himachal Pradesh resident, Nirmala Devi opened an account with ICICI Bank in February 2020 while her son Vijay was her nominee.
Vijay has been employed with Radico NV Distillers since 2017 and was on deputation to Sapphire Intrex.
As an analyst who provides technical views along with news flows on international markets, and public and corporate announcements, Vijay used to report to one Sunil Gupta, vice president of finance. The team used to identify sectors to invest in. They also carried out research and identified stocks to invest in.
Once stocks were identified, Vijay — on behalf of his employer — used to place trading orders with a broker.
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The market regulator has taken action against Vijay for the trade conducted through the account of his mother.
He used to trade on the basis of charts he made during the course of his job. He admitted that the trades he conducted on behalf of his mother may match the trades of his employer Sapphire, but claimed that it was not intentional.
Although the trades were carried out from Nirmala Devi’s account and her mobile number was linked to it, this mobile used to be in the possession of her son during market hours.
Consequently, Sebi has imposed penalties on her son for front-running the trades of Sapphire and on her mother Nirmala Devi for allowing her trading account to be used for front-running.
Now, the mother-son duo is directed to disgorge a sum of ₹38.78 lakh within 45 days from the date of the order.
Besides, they have been imposed a penalty of ₹77.57 lakh within 45 days from the date of the receipt of the order. They are also barred from accessing the securities market for three years.
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Published: 27 Mar 2024, 10:21 PM IST