Sebi bans IIFL dealer, 5 others for equity fraud – Times of India

MUMBAI: Combining advanced data analytics tools along with CCTV footages from ATMs and other related trails, markets regulator Sebi has caught six people for front-running equity trades for clients of IIFL Wealth & Asset Management.
The six people used what is known as ‘mule accounts’ — which involves utilising accounts of people who could not otherwise be proved to be related to each other through KYC or banking operations data. The six people have been banned from the market, pending investigation.
In a 73-page order by Sebi whole-time member Madhabi Puri Buch, it said that Santosh Brijraj Singh, a dealer with IIFL Wealth, used to pass on information about trades by his employer’s clients to Virendra Pratap Singh, his wife Neha Virendra Singh and another person named Adil G Suthar, who also in constant touch with the Singhs and one Gulammohammed Gulamabbas Shaikh.
“The trades of front-running entities were intra-day trades and are mostly on common scrips days with the IIFL Group entities,” the report noted. The people who were front-running IIFL’s trades earned about Rs 60 lakh between December 2019 and August 2020 compared to minuscule profits or loss during the period preceding those months.
According to KYC, the income levels of these entities are in the range of Rs 1-5 lakh, however, their trading activities were running into crores of rupees, Sebi noted. To blind out audit trails, the people whose bank accounts were used to get the profits from insider trades, were not the same people who withdrew money from these accounts using ATMs of various banks.
On Sunday, IIFL Wealth suspended Santosh Singh and also started an internal enquiry into the matter. It said that the systems, processes and controls which are in place are according to regulatory requirements. It will ensure full cooperation to Sebi in the investigation in this case, a company release said.