The Securities and Exchange Board of India (SEBI) has barred nine entities, including a PNB MetLife dealer and his associates, from participating in the securities market for allegedly generating illegal gains of Rs 21.16 crore through front-running. The investigation found that the entities had accessed confidential information about impending trade orders of PNB MetLife and other clients, and had used this information to execute fraudulent trades and profit from market movements.
The front-running scheme was executed by the named individual, Sachin Dagli, and his brother Tejas Dagli, who would access non-public information about trade orders and then use this information to buy or sell securities in a way that profited from the market movements caused by the large client trades. The scheme was carried out for more than three years, from January 2021 to July 2024.
SEBI’s investigation found that the entities had executed 6,766 instances of front-running trades, resulting in unlawful gains of Rs 21.15 crore. The regulator has impounded the unlawful gains and barred the entities from buying, selling, or dealing in securities until further orders.
PNB MetLife, in a statement, said it has cooperated with the authorities in the matter and thanked SEBI for its findings. The company also stated that it has taken disciplinary action against the individual who was found to have committed the fraud.
The case highlights the risks of insider trading and the importance of regulatory bodies like SEBI in detecting and punishing such frauds. The case also underscores the need for companies to implement robust internal controls and monitor their employees’ activities to prevent such frauds from occurring.