The Securities Exchange Board of India (SEBI) has detected a case of front running involving an equity dealer with PNB Metlife India Insurance. The dealer, Sachin Dagli, and his associates illegally gained some money over three years.

SEBI has issued an interim order barring Dagli and nine associated entities from the market and ordered them to disgorge the illicit gains.

The market regulator also instructed banks, mutual funds, and depositories to block the accounts of the nine entities until further notice.

Investigations are ongoing.

SEBI’s surveillance system flagged potential front running in PNB MetLife’s trades. The investigation revealed that Dagli shared advance trade information with Sandeep Shambharkar, who passed it on to Tejas Dagli, Sachin’s brother.

With the help of others, they engaged in insider trading, buying stocks before large PNB MetLife trades and selling them for a profit once the trades were executed.

In other cases, they short sold stocks ahead of PNB MetLife’s sell orders and profited when stock prices fell.

For the unversed, front running is an illegal practice where a trader takes advantage of advance knowledge of a large upcoming trade that is likely to affect stock prices.

This practice undermines market integrity and fairness.