Securities and Exchange Board of India (SEBI) has ordered impounding of unlawful gains worth nearly Rs 15 crore from the brokerage firm Sharekhan and 15 other entities. Front running is an illegal practice in the stock market where an entity trades on the basis of advance information from a broker or analyst before the information has been made available to their clients.
This refers to the 'front running' in at least 29 shares, including Idea Celluar, Suzlon Energy, Jet Airways, DLF, Cairn India, ICICI Bank, RCOM, Indian Hotels, HDFC Ltd, L&T, Unitech, Yes Bank, Videocon, JSW Steel and Hindalco.
SEBI directed impounding of the illegal gains of Rs 50.93 lakh from the Sharekhan, while an amount totalling to over Rs 14 crore, which would be impounded from 15 other entities including individuals and companies.
"As the alleged gains were made during the period March 2009 - March 2011, it becomes reasonable and necessary to levy an interest at 12 per cent simple interest per annum from the date on which such profits were earned," SEBI’s order noted.
"Therefore, Sharekhan’s bank and demat accounts are not ordered to be frozen for debits immediately, subject to it depositing the amount to be impounded ie Rs 50,93,894," the order said.
"Therefore, in order to prevent such persons / entities from diverting the funds and to safeguard the interests of securities market, it becomes necessary for SEBI to take urgent preventive steps of impounding and retaining the proceeds by way of an interim measure," Sebi Whole-Time Member Prashant Saran said.
European banking major BNP Paribas said that it is acquiring Sharekhan in an all-cash deal for an undisclosed sum of money. Market sources said the deal was valued at about Rs 2,200 crore. The fate of this buyout is now in a dilemma.
SEBI has said that Sharekhan has made illegal gains of nearly Rs 31 lakh and together with interest it should transfer and amount of about Rs 51 lakh to SEBI within seven days. It also ordered another 12 entities to return the illegal gains, along with interest, Rs 13.5 crore and another three entities Rs 65 lakh. These entities are asked not to sell any shares, properties, till they return their illegal gains.
By Premji
