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    HomeBusinessFront running case: Sebi bans former Religare Finvest employee from capital mkt;...

    Front running case: Sebi bans former Religare Finvest employee from capital mkt; levies fine

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    “Noticee no. 1 (Bhola Nath Dhall) has taken unfair advantage of such information that was not available to the public and has through the account of Noticee no. 2 (Abhishek Dhall), front run the trades of RFL, making wrongful gains/averting loss to the tune of Rs 12.34 lakh,” Sebi noted.

    Sebi on Wednesday barred Bhola Nath Dhall, a former employee of Religare Finvest Ltd, from the capital markets for two years and imposed a fine of Rs 6 lakh on him for front running the trades of the NBFC.

    In addition, he has been directed to disgorge Rs 12.34 lakh along with interest, the Securities and Exchange Board of India said in its order.
    Front-running refers to an illegal practice in stock market where an entity trades on the basis of advance information from a broker or analyst before the information has been made available to their clients.

    Apart from Bhola Nath Dhall, Sebi has restrained Abhishek Dhall from the capital markets for three months.
    According to Sebi, Bhola Nath Dhall, who was the Vice President – Risk of Religare Finvest Ltd (RFL) was aware of the impending orders of RFL, in which the company was going to initiate liquidation of collateral shares of its borrowers/ customers for recovery of margin shortfall.

    “Noticee no. 1 (Bhola Nath Dhall) has taken unfair advantage of such information that was not available to the public and has through the account of Noticee no. 2 (Abhishek Dhall), front run the trades of RFL, making wrongful gains/averting loss to the tune of Rs 12.34 lakh,” Sebi noted.

    It further said that Abhishek Dhall, who then was a student aged around 18-19 years, had no knowledge of the impending orders of RFL and was not involved in any manner in the trades that have occurred in his account and it was Bhola Nath Dhall, who had placed all the front running orders in the account of Abhishek Dhall. “Noticee no. 1 had front run the trades of RFL through the trading account of Noticee no. 2, who had authorised noticee no. 1 to execute trades on his behalf. Hence, … noticees no. 1 and 2 have indulged in front running of the trades of RFL in violation … of the PFUTP (Prohibition of Fraudulent and Unfair Trade Practices) Regulations,” Sebi said in its 33-page order.

    Accordingly, the regulator said, “Bhola Nath Dhall (Noticee no. 1) is restrained from accessing the securities market and further prohibited from buying, selling or otherwise dealing in securities, directly or indirectly, or being associated with the securities market in any manner, whatsoever, for a period of two years”.
    The order came after Sebi conducted an investigation into trading activities of Bhola Nath Dhall in the scrips of several companies for the period May 2015 to April 2016 to ascertain whether or not he had front run on the trades of RFL, an NBFC providing SME lending.

    Last week, Sebi passed final orders in matters pertaining to front-running, while banning former dealers of IIFL Group and Fidelity Group.

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