SEBI Bans 5 Entities In LIC Front-Running Case

The regulatory body, Securities and Exchange Board of India (SEBI) has banned five entities, including an employee of Life Insurance Corporation of India (LIC), from dealing in the securities market. It has also confiscated illegal gains worth Rs 2.44 crore made by them in front running case of trades of the nation's largest insurer.

Sarita Garg, Kamlesh Agarwal, Ved Prakash HUF, Sarita Garg HUF and the one who works in the investment department of LIC, Yogesh Garg have been involved. All of them are connected through family ties, SEBI highlighted in an interim order on April 27.

Using non-public information, Garg would place his buy order before LIC's. As and when LIC placed its buy order, the price of the stock went up and Garg sold the securities bought earlier, thereby pocketing the difference. The regulatory body found out in its investigation.

SEBI conducted the investigation from 2020 through 2022. In a span of two years it was noticed that Garg key person involved in front running the trades of LIC in stocks like Astral, Havells India, Aditya Birla Sun Life AMC and Bharat Dynamics.

"The trading pattern in accounts of late Ved Parkash Garg (father of Yogesh Garg) shows that the first leg of trades was placed/executed just prior to the impending orders of LIC and the second leg of the intra-day trade (squaring off trades) were placed prior to the last tranche of order by LIC," as per the SEBI order.

SEBI has asked LIC to review its extant processes and take necessary measures to prevent, detect, and remediate any fraudulent activities. Meanwhile, the fraudulent people involved have been ordered to file their reply within 21 days.