SEBI has instructed other people involved in the case to return Rs.1.75 crore which they have made unlawfullyfrom the tipoffs.
A seven-year-old front running case at HDFC Mutual Fund has finally come to an end. SEBI has restrained Nilesh Kapadia, former Assistant Vice President (Equity) at HDFC MF and his aides from dealing in the securities market. SEBI has barred all these persons from dealing in markets for 10 years i.e. up to June 2020. The market regulator had earlier restrained them from dealing in securities market on June, 2010.
SEBI has also instructed Rajiv Sanghvi, Chandrakant P Mehta and Dipti Mehta who were involved in this case to collectively return over Rs. 1.75 crore within 45 days which they have made unlawfully from the tipoffs.
In an order, SEBI said, “Nilesh Kapadia is hereby restrained from accessing the securities market and further prohibited from buying, selling or otherwise dealing in securities, for a period of ten years. He shall also not associate himself with any intermediary or any entity registered with SEBI for a period of 10 years. Also, Rajiv Ramnikal Sanghvi, Chandrakant P Mehta and Dipti Paras Mehta are restrained from accessing the securities market. The period of such restraint already undergone by him vide the interim order dated June 17, 2010 shall be taken into considered while computing the period of restraint as directed above.”
In 2007, SEBI found out that Kapadia, a former equity dealer with HDFC Mutual Fund had tipped his friend Rajiv Sanghvi before placing the orders for his company. Sanghvi further tipped off Chandrakant Mehta and Dipti Mehta to make an unlawful gains of Rs.2.54 crore. Front running is buying or selling securities ahead of a large order so as to benefit from the subsequent price.
In its action, the market regulator had asked Nilesh Kapadia and his aides to deposit the estimated losses and prohibited them from dealing in the securities market till further orders. Kapadia had to leave his job following the interim order of SEBI in 2010. Also, SEBI had also instructed HDFC MF to investigate the matter and issued show cause notices to them seeking explanation into the matter.
