MUMBAI: Sebi on Monday barred 11 entities from the market for front-running trades in Fidelity Group, a foreign portfolio investor (FPI), and asked these to disgorge nearly Rs 2.1 crore of illegal profits. According to the order, Vaibhav Dhadda, a trader with Fidelity Group, along with his mother Alka and sister Arushi, were front-running the exact trades that the FPI employee was putting in.
The case relates to several trades carried out by these entities in 2019 using insider information passed by Vaibhav to other entities either directly or indirectly. Through an interim order, Sebi had in December 2019 banned these entities from the market.
Subsequent investigations by the markets regulator found that another eight people were also involved with members of the Dhadda family in these trades and, hence, the order on disgorgements as also the bans.
Sebi’s investigations showed that Vaibhav, then an employee with Fidelity, and his wife were residents in Hong Kong and the internet trading accounts for some of those charged in the case were operated out of the same island city. The trades by the Fidelity Group entities were carried out through top foreign and domestic brokerages like Goldman Sachs, UBS Securities, Citigroup and ICICI Securities, and Vaibhav was aware of these trades.
On the other hand, Alka and Arushi Dhadda were aware of the trades by the FPI and took positions ahead of those, thus indulging in front-running. And after Fidelity’s trades were executed, the front-runners sold off their positions and made some quick gains. “It appeared that Vaibhav Dhadda had prima facie front-run various entities of Fidelity Group by placing orders through the trading accounts of Alka Dhadda and Arushi Dhadda,” the Sebi order said.
The Sebi order showed that the entities together had made a total illegal gain of nearly Rs 3.6 crore. Of this, Rs 1.9 crore has already been impounded by the regulator. The balance amount from the illegal gains from front-running and also interest on it adds up to about Rs 2.1 crore. Sebi show-caused the entities as to why they should not be banned from the market for indulging in these illegal activities.
The entities were also directed not to dispose of any assets, movable or immovable, without the prior permission of Sebi, the order said.

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