MUMBAI: Markets regulator Sebi has detected a case of front running by an equity dealer with PNB Metlife India Insurance by which the dealer and his associates had together made illegal gains of Rs 21.2 crore over more than three years. Sebi, through an interim order, has barred Sachin Dagli (the dealer), and his associates (nine entities in total) from the market and asked them to disgorge the ill-gotten gains.
Sebi has also directed banks, mutual funds and depositories to block all the accounts of the nine entities till further order. Sebi’s investigations in the matter are continuing.
In its order Sebi said that its surveillance system had generated an alert about possible front running in the trades of PNB MetLife. Subsequent investigations showed that Sachin Dagli was sending prior information about the trades of the life insurer to Sandeep Shambharkar, who in turn would send the same to Tejas Dagli, Sachin’s brother.
With the help of six other conduits, they used to indulge in insider trades where they would buy the same securities that PNB MetLife would buy but before those large trades were put to the exchanges. After the life insurers trades were put in and the stock prices went up, they would sell those stocks at a profit. In some other instances, they will short sell some stocks that PNB MetLife was to sell, again ahead of those large trades. After those large sell orders were executed and the stock prices dipped, they would square off their trades for a profit.