New Delhi: Regulator SEBI has disposed of a case against Sanjay Sanghvi, after he agreed to pay Rs 15 lakh and take a 3-year voluntary debarment from the market to settle charges of fraudulent and unfair trade practices in the alleged front running in shares traded by HDFC Mutual Fund.
SEBI said that the settlement, which has been reached "without admission or denial of guilt", would apply to the charges levelled against Sanghvi in this matter alone.
The Securities and Exchange Board of India (SEBI) had conducted an investigation into the alleged 'front running' activities that had taken place in a number of shares traded by HDFC Asset Management Company (AMC).
Front-running is an illegal market practice, wherein shares are traded based on prior information about the trading calls to be taken by institutional and other large investors.
On the basis of its preliminary findings, SEBI in June 2010 had prohibited some persons and entities from buying, selling or dealing in securities till further orders.
After completion of its probe, SEBI in February 2011 issued a show cause notice to Sanghvi, as he had allegedly violated the regulations about Prohibition of Fraudulent and Unfair Trade Practices in Securities Market.
While the proceedings were in progress, Sanghvi proposed a settlement in July 2011 under SEBI's consent order mechanism and thereafter revised the offer of settlement in September that year.
As per the revised terms of settlement, Sanghvi proposed to pay Rs 15 lakh and undergo a voluntary debarment for a period of 36 months from buying, selling or dealing in the securities, directly or indirectly.
After deliberating over the consent proposal, SEBI's High Powered Advisory Committee (HPAC) recommended that the proceedings against Sanghvi may be settled on those terms.
These recommendations were accepted by SEBI and it communicated the same to Sanghvi in February this year.
Subsequently, SEBI passed the consent order, after Sanghvi paid Rs 15 lakh and took a voluntary debarment from the market for a period of 36 months.
The regulator said that the consent order is without prejudice to its right "to initiate enforcement actions, including commencing or reopening of the proceedings pending against the applicant," if any representation made by him is subsequently discovered to be untrue, or the applicant breaches any of the consent terms or undertakings.