Mumbai: Sebi Unveils Front-Running Scheme by PNB Metlife Equity Dealer

Markets regulator, Sebi, has uncovered a front-running case involving an equity dealer at PNB Metlife India Insurance. The dealer, Sachin Dagli, along with his associates, amassed illegal gains of Rs 21.2 crore over more than three years.

Sebi, in an interim order, has prohibited Dagli and his associates, totaling nine entities, from the market and demanded they return the illicit profits. Banks, mutual funds, and depositories have been directed to freeze all accounts of these entities until further notice. Sebi's ongoing investigation into the matter continues to unfold.

Sebi's surveillance system initially flagged potential front-running in PNB MetLife's trades. Further investigation revealed that Dagli was providing prior trade information to Sandeep Shambharkar, who then relayed it to Tejas Dagli, Sachin's brother. Utilizing six additional intermediaries, they engaged in insider trading, purchasing securities PNB MetLife intended to buy before the large trades were executed on the exchanges. Post PNB MetLife's trades, the stock prices would rise, allowing them to sell at a profit. In other instances, they shorted stocks PNB MetLife planned to sell, profiting from the subsequent price drop after the large sell orders were executed.