Sebi's Rs 55 Lakh Penalty on Adhunik Dealcom for Front-Running

New Delhi, Jul 5 (PTI) Capital markets regulator Sebi has imposed penalties totalling Rs 55 lakh on Adhunik Dealcom and two other individuals for their involvement in front-running of trades.

Front-running refers to an illegal practice in the stock market where an entity trades based on advanced information from a broker or analyst before the information has been made available to its clients.

In a 38-page order passed on Friday, Sebi found in nine instances that Adhunik Dealcom placed orders ahead of the trades of the Big client i.e. SIL (Santosh Industries Ltd), and thereafter squared off its trades and thus made a profit of Rs 24.39 lakh.

The regulator said it is established that Adhunik Dealcom, Pradeep Kumar Poddar, and Kamal Kumar Dugar flouted Sebi's PFUTP (Prohibition of Fraudulent and Unfair Trade Practices) rules.

Accordingly, Sebi slapped a fine of Rs 35 lakh on Adhunik Dealcom, and Rs 10 lakh each on Pradeep Kumar Poddar (Director of Adhunik Dealcom Pvt Ltd) and Kamal Kumar Dugar.

The order came after the Securities and Exchange Board of India (Sebi) carried out an investigation to find whether Adhunik Dealcom Pvt Ltd had front run the trades of the Big Client i.e. Santosh Industries Ltd, in violation of provisions of Sebi's PFUTP rules.

The period of the investigation was from June 1 to November 30, 2022.