Markets regulator Sebi today directed six entities, including five individuals, to disgorge illegal gains made in the HDFC Mutual Fund front running case.
Rajiv Sanghvi, Rajiv Sanghvi-HUF, Sanjay Sanghvi, Sonal Sanghvi, Dipti Mehta and Kalpana Kapadia have been asked to disgorge the wrongful gains along with interest.
Sebi had carried out an investigation into the matter of front-running by certain entities between June 2000 and June 2010.
In an order, Sebi directed the five entities to disgorge the wrongful gains made by them along with simple interest of 12 per cent per annum. This would be applicable from the respective dates of their transactions till the respective dates of deposit of the respective amounts in escrow accounts in compliance with the tribunal's ruling.
The Securities Appellate Tribunal (SAT) passed an order in the matter on March 4, 2016.
As per the latest Sebi order, Rajiv Sanghvi made illegal gains to the tune of Rs 27,09,298, Rajiv Sanghvi-HUF (Rs 9,72,691), Sanjay Sanghvi (Rs 39,85,851), Sonal Sanghvi (Rs 20,03,481), Dipti Mehta (Rs 8,31,096) and Kalpana Kapadia (Rs 47,24,293).
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According to the regulator, the amounts already deposited by the entities in the escrow accounts in compliance with the SAT directions should be utilised for the purpose of disgorgement,
"The entities shall pay the balance amounts ie. the interest on the unlawful gains calculated with simple interest of 12 per cent from the respective dates of their transactions till the respective dates of deposit of the respective amounts in escrow accounts within 45 days...," it added.
Besides, the watchdog has asked banks and depositories -- with whom the entities' accounts lie -- not to make any debit without its permission.
"The entities are also directed not to dispose of or alienate any of their assets/ properties/ securities, till such time the direction of this order is complied with," the order noted.
Front-running refers to an unethical practice of someone trading in shares on the basis of advance information given by a broker, analyst or other executive at a market intermediary before the trades are conducted by that entity.
In January 2016, Sebi had ordered seven entities to disgorge Rs 3.35 crore worth of illegal gains made by them in the matter.
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