Sebi bans six persons from securities market in IIFL Group front running case

Sebi on Friday barred six persons from the securities market for up to five years for front running the trades of India Infoline Group (IIFL Group). In the case, a dealer of India Infoline Group and his connected entities used "mule" accounts.

Sebi has barred Santosh Brijraj Singh and Adil Gulam Suthar from the market for five years while Virendra Pratap Singh, Neha Virendra Singh, Gulammohammed Gulamabbas Shaikh and Mohammedidrish A Shaikh have been restrained for two years.

Also, these persons have been restrained from holding the post of director, any managerial position or associating themselves in any capacity with any listed public company.

In addition, Sebi levied a penalty of Rs 10 lakh on Santosh Briraj Singh and Rs 8 lakh on Adil Gulam Suthar.

Sebi noted that these persons were front running the trades of six entities of IIFL Group, including IIFL Asset Management, also called Big 'Clients'.

The regulator found that Santosh Brijraj Singh and Adil Gulam Suthar with the help and cooperation of Virendra Pratap Singh, Neha Virendra Singh, Gulammohammed Gulamabbas Shaikh and Mohammedidrish A Shaikh employed a pre-determined scheme to front run the impending orders of the Big Clients. Pursuant to the scheme, they have front run the orders of the Big Clients on multiple occasions during the investigation period and have made considerable wrongful gains.

"Noticees No 5 and 6 (Santosh Brijraj Singh and Adil Gulam Suthar) who have opened, operated, managed and controlled the accounts of the Noticees No 1 to 4 (other four persons) and sometimes they used to get monetary assistance from Noticees No 5 and 6. It was also unearthed that Noticees No 1 to 4 were poor and not literate persons and were managing their lives with difficulties," Sebi said in an order.

Earlier in October 2020, the regulator, through an interim order, had barred these six individuals from the capital market till further directions.

The order came after the Securities and Exchange Board of India (Sebi) based on a surveillance alert, initiated a preliminary examination in the present matter against Virendra Pratap Singh and Neha Virendra Singh who were suspected to be front running the trades of India Infoline Asset Management Ltd.