Mumbai: Markets Regulator Sibi A case of front running by an equity dealer has been detected with PNB Met Life India Insurance through which the dealer and his accomplices together made an illegal gain of Rs 21.2 crore over a period of more than three years. Sebi, through an interim order, has barred Sachin Dagli (dealer) and his associates (nine entities in total) from the market and asked them to liquidate the illicit profits.
Sebi has also directed banks, mutual funds and depositories to freeze all accounts of nine institutions till further orders. Sebi’s investigation is on in this matter.
In its order, Sebi said its monitoring system had raised an alert about possible front-running in PNB MetLife’s trade. Later investigations revealed that Sachin Dagli was passing on advance information about the life insurance company’s business to Sandeep Shambharkar, who in turn would pass it on to Sachin’s brother Tejas Dagli.
With the help of six other conduits, they used to engage in insider trading where they would buy the same securities that PNB MetLife would buy but before these large trades were placed on the exchange. After life insurers are put into business and stock prices rise, they will sell those stocks at a profit. In some other cases, they would short sell some of the stocks that PNB MetLife was going to sell, again ahead of these larger businesses. After these large sell orders are executed and stock prices fall, they will close their trades for profit.