SEBI Bars 12 Entities For 5 Years in Front‑Running Case, Orders ₹1.07 Crore Disgorgement

The Securities and Exchange Board of India (SEBI) has issued a final order barring 12 entities from the securities markets for 5 years in a front‑running case. The order includes monetary penalties totalling ₹90 lakh and a directive to disgorge unlawful gains of ₹1.07 crore with 12% annual interest.

SEBI stated that the entities collectively used non‑public information (NPI) linked to impending trades of a major client to execute advance trades. The regulator concluded that the actions constituted fraudulent and unfair trade practices under applicable regulations.

Findings From SEBI’s Investigation

SEBI’s 102‑page order outlines how confidential information was misused to benefit connected trading accounts. The regulator found that the major client, Paresh N Bhagat, Chairman and Managing Director of Mangal Keshav Financial Services, placed orders through dealers Ashish S Parekh and Rajesh Joshi.

Both dealers were found to be in possession of NPI, which they then shared with intermediaries Nagendra S Dubey and Chirag Atul Pithadia. The order establishes that this information was used to execute trades in advance of the client’s orders through connected entities.

Front‑Running Mechanism and Entities Involved

According to SEBI, the trades carried out by Noticees 1 to 9 were executed in collusion with Noticees 10 to 13, who acted as information carriers. The entities identified as front‑runners include Dipa Ashish Parekh, Kashmira Joshi, Nikhil Hirachand Jain, Nikhil Hirachand Jain HUF, Alpesh Hirachand Jain HUF, Nagendra S Dubey HUF, and the late Sushma Nagendra Dubey through her legal heirs, Jagruti Atul Pithadia and Sahil Atul Pithadia.

SEBI stated that these trades were executed using NPI related to the major client’s impending orders. The regulator concluded that the conduct violated the Prohibition of Fraudulent and Unfair Trade Practices (PFUTP) Regulations.

Penalties, Market Restrictions, And Additional Directions

SEBI has restrained Noticees 1 to 13 from accessing the securities markets for 5 years, with the period counted from the date of the interim order issued on December 26, 2022. The regulator also prohibited Ashish, Nagendra, and Chirag from associating with any SEBI‑registered intermediary or listed company for 4 years, while Rajesh received a similar 4‑year bar.

Monetary penalties ranging from ₹5 lakh to ₹15 lakh have been imposed on the entities based on their degree of involvement. The order also vacated previous directions against the late Sushma Nagendra Dubey, except for disgorgement obligations assigned to her legal heirs.

Read More: SEBI’s New Rules for Mutual Funds to Be Effective from April 1, 2026.

Conclusion

SEBI’s final order underscores its strict stance on market misconduct involving the misuse of confidential information. The penalties and disgorgement requirements aim to address unlawful gains and restrict future participation by the involved entities.

The investigation highlights the regulator’s enforcement approach in cases involving collusion between dealers, intermediaries, and connected trading accounts. SEBI has directed the disgorgement amounts to be deposited into the Investor Protection and Education Fund within 45 days.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. This does not constitute a personal recommendation/investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions.

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