LIC employee, four others under Sebi lens for front-running

LIC employee, four others under Sebi lens for front-running

The Securities and Exchange Board of India issued an interim ex parte order on Thursday against five suspected entities for front-running the trades of Life Insurance Corporation of India and asked the latter to take steps to prevent and detect unfair trade activities.

Yogesh Garg worked in the investment department of LIC through which trades on behalf of LIC were placed. Being a dealer, he was in possession of non-public information regarding impending orders of LIC and acted as an information carrier.

The other four noticees–Sarita Garg, Kamlesh Agarwal, Ved Prakash HUF and Sarita Garg HUF–are connected to Garg through family relations, common address and common phone number, according to KYC details.

Together, they are estimated to have made profits of Rs 2.44 crore through front-running trades for the period January 1, 2020 to March 15, 2022.

Organisations such as LIC are critical to the securities market and are expected to have adequate processes to prevent, detect and remediate any fraudulent, manipulative or unfair trade practices by its employees, the regulator said in its 51-page order.

Any prima facie transgression of regulations, particularly by an employee of such an organisation, needs to dealt with sternly, it said.

“LIC is hereby advised to review its extant processes and take all necessary additional measures as may be necessary to prevent, detect and remediate any fraudulent, manipulative or unfair trade practices by its employees in relation to its investment activities,” the Sebi order by whole-time member Ananth Narayan G said.

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The five noticees have been restrained from buying, selling or dealing in securities either directly or indirectly in any manner whatsoever until further orders. The proceeds in the bank accounts of noticees, to the extent of illegal gains, will be impounded, jointly and severally.