LIC front-running case: Sebi confirms securities market ban on five companies
The five entities are linked by family relationships, a common address and a common telephone number.
Sebi on Tuesday confirmed a ban from the securities market on five entities, including an employee of the Life Insurance Corporation of India (LIC), in a case involving high-profile transactions of the state-owned insurer.
Front-running refers to an illegal stock market practice in which an entity trades based on advanced information provided by a broker or analyst before the information has been made available to its clients.
The comments in this decision are preliminary in nature and subject to further investigation. The investigation shall be conducted without being influenced by any of the directions given or by any observation made in the interim order or in the present order.
Based on the outcome of the investigation, appropriate proceedings may be initiated in accordance with law, Sebi said.
In an affirmative order, Sebi clarified that the restriction imposed through the interim order dated April 27, 2023 on Yogesh Garg, Sarita Garg, Kamlesh Agarwal, Ved Prakash HUF and Sarita Garg HUF from directly or indirectly buying, selling or trading in securities. , in whatever form, will continue until further notice.
“I am of the view that the submissions made in the notices are insufficient to refute the prima facie conclusions drawn in the interim order.
“…no reason or grounds to deviate from the prima facie findings in the interim order and, therefore, the finding in the interim order that the notices prima facie effected the transactions of the major customer , resulting in violation of PFUTP Regulations, confirmed,” Sebi’s permanent member Ananth Narayan G said in the order.
In April 2023, Sebi barred five entities, including an employee of Life Insurance Corporation of India (LIC), from the securities market and seized illegal profits of Rs 2.44 crore made by them, in a case related to spearheading the state insurer’s transactions.
They have also been asked not to engage in fraudulent, manipulative or unfair business practices, including front-running.
As per Sebi’s orders, Yogesh Garg is still professionally associated with LIC. Sebi has been informed by LIC that Yogesh Garg has been transferred from the company’s investment arm to another unit of the insurance company.
The five entities are linked by family relationships, a common address and a common telephone number.
In its order, Sebi found that Yogesh Garg, as a dealer of LIC, was in possession of non-public information about impending orders from LIC and acted as a carrier of information. He has also prima facie used the account of late Ved Parkash Garg to trade on the non-public information of LIC.
As far as the other four entities are concerned, prima facie they or their accounts played an important role in LIC’s progressive transactions.
These entities are alleged to have made illegal profits through prima facie front-running activity amounting to Rs 244.09 lakh.
By engaging in such transactions, they have prima facie violated the provisions of the PFUTP (Prohibition of Fraudulent and Unfair Trade Practices) Rules.
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First print: March 20, 2024 | 12:02 pm IST