Market watchdog SEBI verified that a Life Insurance Corporation of India (LIC) employee had front-run a large client’s trades after LIC clarified the situation by stating that it was an old instance of front-running.
What did LIC say about employees’ participation?
According to LIC, stringent controls for the dealing room’s transactional hygiene have been put in place. “We have further placed robust controlling mechanisms along with best practices to prevent any kind of front running,” the company stated.
“Appropriate action against the concerned official has been taken by disciplinary authority by his removal from services of the corporation after following the due administrative procedure,” the insurance company stated.
What did SEBI say about the issue?
The Interim Order was passed based on the prima facie conclusions to prevent further fraudulent trading activity and to prevent the defalcation of the wrongful gains, which totaled INR 244.09 lakh as elaborated in the Interim Order, according to the Securities and Exchange Board of India. I find that the Notices’ submissions are insufficient to challenge the Interim Order’s prima facie conclusions, given the reasons covered in the preceding paragraphs. I also want to point out that a thorough investigation is still going on in this particular case. The conclusion in the Interim Order that the Notices have prima facie front run the trades of Big Client in violation of sections 12A(a), (b), (c), and (e) of the SEBI Act and regulations 3(a), 3 (b), 3 (c), 3(d), 4(1) and 4(2)(q) of the PFUTP Regulations stands confirmed because I do not see any justification or basis for doing otherwise.”
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