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Former equity dealer Kapadia barred from mkts

July 28, 2014

The Securities and Exchange Board of India (Sebi) has barred former equity dealer Nilesh Kapadia and three others from markets in the front-running case at HDFC Mutual Fund (MF) and ordered return of more than ` 1.75 crore worth illegal gains.

Kapadia, who quit the top fund house after the 2007 case came to light, and the three individuals— Rajiv Ramniklal Sanghvi, Chandrakant P. Mehta and Dipti Paras Mehta— who were trading on the basis of his tip-offs, have been barred from markets for 10 years.

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 trades are conducted by that entity.

The practice adversely affects interests of common investors.

In its 59-page order, the capital market regulator said the 10-year restraint period would be calculated after taking into account the restraint already undergone by Kapadia vide an interim order dated June 17, 2010.

For the three others, who were not directly linked with HDFC MF but were found to be ' associated persons' with Kapadia in terms of their market dealings, the restrain order would increase by further five years if they fail to deposit the disgorgement amount within 45 days.

The matter relates to trades conducted in 2007. Sebi begun its probe after receiving two separate references from the Bombay Stock Exchange and the National Stock Exchange on suspected instances of front-running of the orders of HDFC MF. The exchanges found certain coincidence between trading pattern of the three individuals with that of HDFC AMC.

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Source: Mail Today (India)

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