Sebi conducts multiple raids at premises of market experts in front running case

Capital market regulator Sebi on Thursday carried out search and seizure operations in a front running case involving people associated with market experts appearing on television, sources said.

The search and seizure was conducted by the Securities and Exchange Board of India (Sebi) at the official and residential premises of six entities, suspected to be involved in front running on the basis of non-public information.

Where were the search and seizure operations by Sebi conducted?

These search and seizure operations were carried out at multiple locations in Jaipur, Kolkata, Noida and Pune, the sources said, without divulging any identity due to the investigation process still being underway.

Why did the Sebi initiate the raid?

Based on surveillance inputs and its internal alert system, Sebi initiated examination of suspected front running by persons associated with certain market experts appearing on a business news channel.

The modus-operandi of these entities was that they took positions in stocks just before recommendations were made by their associated market experts on the channel.

Trusting and acting on such recommendations, when investors-at-large would deal in such stocks, the said entities would then square-off their positions.

Such front running constitutes a violation under SEBI (Prohibition of Fraudulent and Unfair Trade Practices relating to Securities Market) Regulations, 2003.

What is front running?

Front running in market parlance means buying or selling securities ahead of a large order so as to benefit from the subsequent price move.

During the search and seizure operations, Sebi officials seized various records including those on mobile phones, laptops, desktops, tablets and hard drive disks, found in the custody of these entities.

The data, emails and other documents are being retrieved from the seized devices and a detailed examination will be done, the sources said.