Sebi Impounds Rs 15 Crore from Sharekhan, Others for Front-Running

Published: 31st July 2015 10:29 PM  |   Last Updated: 31st July 2015 10:29 PM   |  A+A-


MUMBAI: Busting a major 'front running' case in the stock market, Sebi today ordered impounding of unlawful gains worth nearly Rs 15 crore from brokerage firm Sharekhan and 15 other entities.

The order comes a day after French giant BNP Paribas announced acquisition of home-grown brokerage firm Sharekhan in an estimated Rs 2,000-crore deal.

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.

In an order passed late in the night, Sebi directed impounding of illegal gains of Rs 50.93 lakh from Sharekhan, while an amount totalling over Rs 14 crore would be impounded from 15 other entities, including individuals and companies.

The case refers to 'front running' in at least 29 shares including Idea Celluar, Suzlon Energy, Jet Airways, DLF, Cairn India, ICICI Bank, RCOM, Indian Hotels, HDFC Ltd, L&T, Unitech, Yes Bank, Videocon, JSW Steel and Hindalco.

The order follows a Sebi probe into suspected front- running by certain entities between March 2009 to March 2011.

The investigation revealed that the trades in the accounts of at least seven entities, collectively referred to as "front-runners" or 'clients of Sharekhan', were in the nature of front-running the orders and trades of the "Sterling Group" and that the subsequent orders placed by the front-runners matched almost completely with the orders placed by the Sterling Group.

These entities carried out their front-running activity predominantly through the stock broker, Sharekhan Limited, and their accounts at Sharekhan were handled by one Madhu Chanda, a branch and relationship manager.

The probe also revealed that the trades of Sharekhan and Madhu Chanda's husband Anandilal Chanda, among others, were ahead of trades of the seven clients of Sharekhan.

In a 42-page order, Sebi further said that one Manish Chaturvedi, an employee in the Sterling Group, was generally placing orders with the stock brokers on behalf of the Group.

He was found to have knowledge of investments and the impending buy or sell orders of the Group.

In its probe, Sebi also retrieved voice recordings from HSBC InvestDirect Securities India Limited and JM Financial Services Limited, pertaining to placement of certain orders in the accounts of the Sterling Group. Mobile call data records of the involved persons were also accessed during the probe.

Stay up to date on all the latest Business news with The New Indian Express App. Download now
(Get the news that matters from New Indian Express on WhatsApp. Click this link and hit 'Click to Subscribe'. Follow the instructions after that.)


Disclaimer : We respect your thoughts and views! But we need to be judicious while moderating your comments. All the comments will be moderated by the editorial. Abstain from posting comments that are obscene, defamatory or inflammatory, and do not indulge in personal attacks. Try to avoid outside hyperlinks inside the comment. Help us delete comments that do not follow these guidelines.

The views expressed in comments published on are those of the comment writers alone. They do not represent the views or opinions of or its staff, nor do they represent the views or opinions of The New Indian Express Group, or any entity of, or affiliated with, The New Indian Express Group. reserves the right to take any or all comments down at any time.

flipboard facebook twitter whatsapp