Markets regulator SEBI has unearthed a progressive scheme involving stock trader Sachin Bakul Dagli of PNB MetLife India Insurance Company and eight other entities, which generated illegal profits of ₹21.16 crore.
The lead of these entities lasted more than three years.
SEBI, through an interim order, on Friday banned Sachin Bakul Dagli and eight other entities from entering the securities market and seized the illicit profits.
The Securities and Exchange Board of India (SEBI) had conducted a probe into the suspected front-running of the Big Client’s trades, PNB Metlife India Insurance Company Ltd, by certain entities.
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The focus of the investigation was to determine whether the suspected entities had conducted Big Client’s transactions in association with other entities, including dealers and/or fund managers, if any, and thereby violated the provisions of SEBI’s PFUTP ( (Prohibition of Fraudulent and Unfair Trade Practices) and the SEBI Act.
The study period was from January 1, 2021 to July 19, 2024. In its study, SEBI found that most of the trading decisions in PNB Metlife were delegated to Sachin Dagli for execution.
The regulator noted that Sachin Bakul Dagli (stock dealer, PNB MetLife) and his brother Tejas Dagli (stock sales trader, Investec) had access to confidential, non-public information about upcoming trade orders from PNB MetLife and Investec’s institutional clients.
They used this information to make trading decisions and shared it with Sandeep Shambharkar, who executed leading trades through the accounts of Dhanmata Realty Pvt Ltd (DRPL), Worthy Distributors Pvt Ltd (WDPL) and Pragnesh Sanghvi.
Directors of DRPL and WDPL, including Arpan Kirtikumar Shah, Kabita Saha and Jignesh Nikulbhai Dabhi, were also involved in facilitating this plan.
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This group conspired to initiate and execute a fraudulent front-running scheme, violating the SEBI Act and the Prohibition of Fraudulent and Unfair Trade Practices (PFUTP), resulting in illegal profits.
Transactions were carried out using non-public information shared via chat platforms. A buy-buy-sell or sell-sell-buy trading pattern was used to profit from market movements caused by large client trades.
“A total of 6,766 instances of such progressive transactions were observed in the accounts of DRPL, WDPL and Pragnesh Sanghvi and as a result, illegal profits of ₹21,15,78,005 were made by these entities,” SEBI noted.
The prominent activities through the accounts of suspected entities – DRPL, WDPL and Pragnesh Sanghvi – have continued for a significantly long period of more than three years, it added.
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Accordingly, SEBI has restrained these entities “from buying, selling or trading in securities, directly or indirectly, in any manner whatsoever until further notice”.
In addition, “an amount of ₹21,15,78,005, being the total unlawful profits earned from the alleged front running activities, is seized jointly and severally” from the nine entities, the regulator said.
