The financial institutions and their regulating bodies have been highly active and looking out towards fining and getting hold of market culprits and fraudsters. There has been massive changes in the rules governing such fraudsters and banks are taking no step backwards regarding this situation anymore.
Securities markets regulator SEBI has taken this thorough grinding a step forward and has started to catch manipulators via their matrimonial profiles and Facebook accounts, in order to establish a personal link with such suspected person’s family members, to get an inside view of the whole case.
SEBI Gets Hold of Trader Vaibhav Dhadda
SEBI has innovatively started to catch market culprits and manipulators, by closely following their Facebook activities and matrimonial profiles, to establish link with family members in front running cases. The markets watchdog has been scanning accounts of suspected persons tirelessly in cases related to insider trading cases.
Almost recently, the markets watchdog got hold of the trader Vaibhav Dhadda, as an extension to the case of front running of several funds of Fidelity Group entities. On checking the trader’s profile, who used an alias Avi, at the matrimonial website www.jainshubhbandhan.com, SEBI looked out to establish his link with family members.
In an interim order dated December 5, SEBI mentioned that the matrimonial website mentioned Vaibhav as the son of Alka Dhadda. Once enough evidence was gathered against him about violation, scanning through his social accounts, SEBI barred Vaibhav as well as his mother Alka and sister Arushi from the capital markets, after it allegedly ound that they were responsible for pocketing gains through front running activities.
What Has SEBI Declared?
After barring the Dhadda family from the capital markets, the regulator has directed them to jointly open an escrow account with a nationalised bank, along with depositing alleged unlawful gains of Rs 1.86 crore made by them, within 15 days. It has also frozen each of their bank accounts, to prevent them from diverting their wrongful gains made from the front-running trades.
Front-running means buying or selling securities well before a large order, to benefit from the subsequent price move. The Sebi probe found that Vaibhav, being the trader on behalf of the Fidelity Group, was in possession of non-public information of the impending trades of Fidelity Group entities.
Also, Alka and Arushi’s trading pattern shows that they took advantage of the impending trading activity of Fidelity Group entities by front-running, thereby generating profits for themselves. Dhaddas’ modus operandi was to purchase a stock just ahead of a buy placed by a Fidelity Group entity on the same stock. Similarly, they would offload a particular scrip just ahead of a sell order placed by the Fidelity firm on the same stock.
Their conducts have prima
facie defrauded the market as general investors have suffered due to their
front-running activity. It resulted in benefit of over Rs 1.85 crore in the
trading account of Alka and Rs 28,500 in the trading account of Arushi. By
indulging in front running trades, these people violated the Prohibition of Fraudulent and Unfair Trade