SEBI Order: The ?2 Crore Sting — How 30 Entities Cheated the ‘Big Client’

The Market’s Secret: SEBI Exposes ?2 Crore Front-Running Scam

In a significant regulatory crackdown aimed at safeguarding market integrity, the Securities and Exchange Board of India (SEBI) has issued a detailed Order against 30 entities and individuals involved in a sophisticated front-running scheme targeting a large institutional investor — referred to as the “Big Client.”

This case underscores SEBI’s growing vigilance against unethical trading practices that exploit confidential information and distort market fairness.

The Heart of the Crime: Front Running

Front running is an illegal trading tactic where a person trades securities using advance, non-public information (NPI) about a major client’s impending order.
Since large trades typically move prices, the front runner enters a position just before the client’s transaction and exits immediately after, capturing quick, risk-free profits.

In this instance, SEBI found that the accused were front-running trades belonging to three entities, collectively termed the “Big Client”, which included certain family trusts.

How the Scheme Operated (January 2021 – October 2022)

SEBI’s investigation exposed a carefully orchestrated network built on confidential data leaks and coordinated trading activity.

• The Insider: Noticee No. 1, who had access to the Big Client’s trading plans, illegally leaked sensitive, non-public information about upcoming transactions.
• The Middleman: Noticee No. 5 acted as the information conduit, passing the insider details down the chain.
• The Traders: Noticee No. 2, associated with a sub-broker/Authorised Person of Angel One Limited, led the execution of front-running trades. Together with 29 connected individuals and entities, they mirrored the Big Client’s moves to profit from predictable price fluctuations.

To execute their plan, the group followed calculated trading patterns such as Buy–Buy–Sell (BBS) and Sell–Sell–Buy (SSB), ensuring that every trade aligned with the expected direction of the Big Client’s large orders.

The Regulatory Findings and Action

After reviewing trades executed between January 1, 2021, and October 31, 2022, SEBI concluded:

• Unlawful Gains: The front runners collectively made ?2.06 crore in illegal profits from 328 trades.
• Legal Breaches: They violated multiple provisions of the SEBI Act, 1992, and the SEBI (Prohibition of Fraudulent and Unfair Trade Practices) Regulations, 2003 (PFUTP).
• Enforcement Measures: Acting under Sections 11(1), 11(4), and 11B of the SEBI Act, SEBI imposed market bans, ordered disgorgement (repayment of gains), and levied monetary penalties on all involved.

???? Why It Matters

This Order reinforces SEBI’s zero-tolerance approach to market manipulation and insider misuse.
By dismantling this front-running network, SEBI reaffirms its commitment to transparency, investor protection, and fair play — ensuring that no one profits from privileged access to market-moving information.