SEBI Bans 9 Entities, Impounds ₹21 Crore in Front-Running Case

The Securities and Exchange Board of India (SEBI) has issued an interim order banning Sachin Bakul Dagli, an equity dealer with PNB MetLife, and eight other entities from the securities market for their involvement in a front-running scheme. This fraudulent activity, operational for over three years, generated illegal gains of ₹21.16 crore by misusing non-public trade information. The investigation, covering the period from January 1, 2021, to July 19, 2024, revealed a systematic violation of SEBI’s PFUTP regulations and the SEBI Act.

Details of the Scheme

Involvement of Key Individuals: The primary accused, Sachin Bakul Dagli (PNB MetLife), and his brother Tejas Dagli (Investec) accessed confidential trade details of institutional clients and shared them with Sandeep Shambharkar for executing fraudulent trades.

Entities Facilitating the Scheme: Front-running trades were executed through the accounts of Dhanmata Realty Pvt Ltd (DRPL), Worthy Distributors Pvt Ltd (WDPL), and Pragnesh Sanghvi. Directors like Arpan Kirtikumar Shah, Kabita Saha, and Jignesh Nikulbhai Dabhi were found complicit in enabling the scheme.

Modus Operandi and Findings

Execution of Trades: Non-public information was shared via chat platforms, and a Buy-Buy-Sell or Sell-Sell-Buy trading pattern was used to exploit market movements caused by large client trades.

Scale of Operation: SEBI identified 6,766 instances of such trades, resulting in unlawful profits of ₹21.16 crore over the three-year period.

Regulatory Action

Market Ban: All nine entities are prohibited from trading in securities, directly or indirectly, until further orders.

Impounding Gains: SEBI has impounded the illegal profits of ₹21.16 crore from these entities jointly and severally.

Response from PNB MetLife

PNB MetLife, in its statement, emphasized its cooperation with SEBI during the investigation and stated that disciplinary action had been taken against the individuals involved. The company reiterated its commitment to corporate governance, transparency, and integrity.

Summary of the news

Key Points	Details
Why in News	SEBI banned nine entities, including Sachin Bakul Dagli, for a front-running scheme generating ₹21.16 crore in illegal gains over three years (Jan 2021–July 2024).
Entities Involved	Sachin Bakul Dagli (Equity Dealer, PNB MetLife), Tejas Dagli (Equity Sales Trader, Investec), Sandeep Shambharkar, DRPL, WDPL, Pragnesh Sanghvi.
Violation	Breach of SEBI’s PFUTP (Prohibition of Fraudulent and Unfair Trade Practices) Regulations and SEBI Act.
Period of Investigation	January 1, 2021, to July 19, 2024.
Gains Impounded	₹21.16 crore jointly and severally from the entities involved.
Action Taken by SEBI	– Restrained entities from trading in securities until further orders.
	– Impounded the unlawful gains made by the entities.
Trade Execution Pattern	Used Buy-Buy-Sell or Sell-Sell-Buy patterns to exploit large client trades.
Company Involved	PNB MetLife India Insurance Company.
PNB MetLife’s Statement	Confirmed disciplinary action against Sachin Bakul Dagli and reiterated its commitment to corporate governance.
Static Information	PNB MetLife: A joint venture between PNB and MetLife International Holdings; focuses on life insurance in India.