Mutual Funds

SEBI Directs Six Entities To Disgorge Illegal Gains In HDFC MF Front-Running Case

SEBI (Securities and Exchange Board of India) directed six entities to give up the illegal gains made in the HDFC MF front-running case along with interest, on July 27, 2018.

The Market Regulator passed an order against six entities, including five individuals – Rajiv Sanghvi-HUF, Rajiv Sanghvi, Sanjay Sanghvi, Sonal Sanghvi, Kalpana Kapadia, and Dipti Mehta, to disgorge the dishonestly gained profits in the HDFC AMC front-running case, along with simple interest of 12 percent per annum.

The Securities and Exchange Board of India investigated the issue of front-running by few entities from June 2000 to June 2010.

The SAT (Securities Appellate Tribunal) already passed an order against the entities in HDFC MF front-running case on March 4, 2016.

According to SEBI, the amounts already paid by these entities in the escrow accounts in accordance with the SAT’s order must also be considered for the disgorgement.

SEBI added that the entities can pay the balance amounts, which include the interest on the illegal gains calculated from the date of their transactions till the date of deposit in escrow accounts. The interest is calculated with simple interest of 12 percent per annum.

The Market Regulator has also asked the banks and depositories, in which the entities have accounts, not to allow any debit transactions without permission.

Furthermore, the Market Regulator has also directed the entities not to dispose of any of their properties, assets or securities until its order is complied with.

Earlier in January 2016, SEBI had directed seven entities to disgorge 3.35 crore Rupees worth of wrongful gains made in this front-running issue, according to The Times of India.

As per the latest order of the Market Regulator, Rajiv Sanghvi made unlawful gains of 27,09,298 Rupees, Rajiv Sanghvi-HUF made 9,72,691 Rupees, Sanjay Sanghvi made 39,85,851 Rupees, Sonal Sanghvi made 20,03,481 Rupees, Dipti Mehta gained 8,31,096 Rupees and Kalpana Kapadia gained 47,24,293 Rupees, in the HDFC MF front-running case.

[The views and opinions expressed in this article are those of the authors and do not necessarily reflect the views and/or the official policy of the website. ]

Bindhu Mol. G loves writing news articles. She excels in SEO articles, technical articles and academic articles. She covers commodities and mutual fund news for OWLT Market.

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