SEBI’s investigation had revealed that fund manager of DBS Chola MF along with other persons had colluded with V K Upadhyay and his brother R. K. Upadhyay who allegedly traded ahead of the orders placed by DBS Chola and earned profit of Rs. 3.67 lakh.
Market regulator SEBI has let off three people allegedly involved in DBS Chola Mutual Fund front running case.
SEBI had conducted an investigation into the unusual price movement of several scrips during the period from April 01, 2008 to May 31, 2008. The investigation revealed that Bajrang Bafna, fund manager of DSB Chola (now L&T MF) along with other persons had colluded with V K Upadhyay and his brother R. K. Upadhyay who allegedly traded ahead of the orders placed by DBS Chola and earned profit of Rs. 3.67 lakh.
In its show cause notice to Bafna, SEBI had alleged that Bafna along with fund manager Anant Deep Katatre) and dealer Mayur Joshi colluded with R.K. Upadhyay and V.K. Upadhyay in front running DBS Chola.
SEBI noted that V. K. Upadhyay had taken large positions on seven days ahead of DBS Chola and squared off almost his entire position on the same day. It alleged that such large number of trades on certain days were executed on the basis of prior knowledge about DBS Chola trading strategy.
In his reply to SEBI’s show cause notice, Bafna said that calls made to R. K. Upadhyay were made in relation to certain clients who had invested in DBS's funds, and the calls pertained to the market updates, fund details etc.
SEBI did not found any material evidence to prove who had passed on the information of trading strategy of DBS Chola to Upadhyay brothers. DBS Chola and Upadhyay brothers both paid Rs. 10 lakh each to settle the case. SEBI gave the benefit of doubt to Bafna and let him off by giving a stern warning to be careful and cautious as regards his conduct and any future lapse will invite stringent action.
