Sebi fine 3 individuals for front running

The Securities and Exchange Board of India has imposed fines on three individuals accusing them of trading based on information leaked by a Hong Kong-based Citigroup trader. The regulator has imposed a total penalty of Rs 1.190000000 on the threesome. Sebi had observed that Sujit Karkare, his wife Shilpa Kotak and his father Purushottam Karkera were trading ahead of the trades of Citigroup Global Market Mauritius for the period October 1,2008 to December 31,2008 as they had prior knowledge of the trades of Citigroup. This practice, front running is used to describe a trade that is executed based on prior knowledge of an impending high volume share sale, which could have an impact on price. The regulator observed from the translations of the telephonic conversations between the Citigroup trader, Suresh Menon and Sujit Karkare that there was flow of information of the stocks,order quantity,order timing and price of the orders placed by Menon for Citigroup. It also alleged that Suresh Menon had passed the order information to Sujit Karkare while in possession of orders of Citigroup and was also actively participating and discussing the trades of Sujit Karkare. Sebi said that Sujit Karkare used the information provided by Suresh Menon to trade through the trading accounts of his wife and his father too. ""Front running is one of the most heinous crimes in the securities markets. It has the potential of eroding the faith of the investors in the securities market. It amounts to defrauding an innocent and unsuspecting investor who blindly repose trust in the entity to transact on his behalf in the securities market,"" the Sebi order said. ""It is of utmost importance that a sense of fair play be maintained in the market so that innocent investors do not find themselves at the receiving end of irregular conduct by entities in the market,"" Sebi said.