SEBI bans six people from securities market in high-profile IIFL group case

SEBI noted that these individuals ran the operations of six IIFL Group entities, including IIFL Asset Management, also known as large “clients.”

SEBI noted that these individuals ran the operations of six IIFL Group entities, including IIFL Asset Management, also known as large “clients.”

The Securities and Exchange Board of India (SEBI) on Friday banned six people from trading in the securities market for up to five years for directing India Infoline Group (IIFL Group) transactions. In this case, a reseller of the India Infoline group and its related entities had used “mule” accounts.

In its order, SEBI banned Santosh Brijraj Singh, who was a reseller of the IIFL Group entity and Adil Gulam Suthar from the market for five years, while banning mule account holders – Virendra Pratap Singh, Neha Virendra Singh, Gulammohammed Gulamabbas Shaikh and Mohammedidrish A. Shaikh for two years.

These individuals have been barred from holding directorships, executive positions, or association in any capacity with a listed public company.

Additionally, SEBI imposed a penalty of ₹10 lakh on Santosh Briraj Singh and ₹8 lakh on Adil Gulam Suthar.

SEBI noted that these individuals ran the operations of six IIFL Group entities, including IIFL Asset Management, also known as large “clients.”

The regulator found that Santosh Brijraj Singh, after becoming aware of the non-public information of the impending large customer orders, communicated them, directly or indirectly, to his associated entity Adil Gulam Suthar.

Thereafter, both of them used the sets of mule accounts to make the foreground trades. They had made significant profits while running the trades.

He further noted that Santosh B. Singh and Adil Gulam Suthar placed trades from the trading accounts of mule account holders – Virendra Pratap Singh, Neha Virendra Singh, Gulammohammed Gulamabbas Shaikh and Mohammedidrish A. Shaikh.

The regulator discovered that Santosh Brijraj Singh and Adil Gulam Suthar, with the help and cooperation of Virendra Pratap Singh, Neha Virendra Singh, Gulammohammed Gulamabbas Shaikh and Mohammedidrish A. Shaikh, used a predetermined pattern to anticipate orders imminent large customers. Pursuant to the scheme, they outpaced orders from large customers on several occasions during the investigation period and made significant unfair gains.

“Notifiers 5 and 6 (Santosh Brijraj Singh and Adil Gulam Suthar) who opened, operated, managed and controlled the accounts of Notifiers 1 to 4 (four other people) and sometimes they used to get financial assistance from Notifiers Nos. 5 and 6. Notices Nos. 1 to 4 were also found to be poor and illiterate people and were managing their lives with difficulty,” SEBI said in an order.

The regulator noted that the trading pattern showed the deployment of BBS (Buy-Buy-Sell) or SSB (Sell-Sell-Buy) strategies.

These are two typical front running modes in which the leaders place buy or sell orders just before the big client’s final buy or sell order and then place sell or buy orders , respectively, after the stock price has risen or fallen after the execution of the final order by the client.

Earlier in October 2020, the regulator, through an interim order, barred these six individuals from accessing the capital market until further instructions.

Following SEBI’s order, IIFL Asset Management Company has suspended the services of its employee Santosh B. Singh.

The order came after SEBI, based on a surveillance alert, launched a preliminary investigation into the present case against Virendra Pratap Singh and Neha Virendra Singh, who were believed to be at the forefront of transactions of India Infoline Asset Management Ltd.

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