Home Market News SEBI confirms that a LIC employee was involved in front-running trades for a major client

SEBI confirms that a LIC employee was involved in front-running trades for a major client

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The Life Insurance Corporation of India (LIC), which is government-owned, announced on Wednesday that it has terminated an employee. This employee, Yogesh Garg, was involved in a front-running case that was reported last year and was subsequently banned by the markets regulator Sebi. LIC stated, “He has been removed from the Corporation’s services after following the proper administrative procedures by the disciplinary authority.”

In the confirmation document, the Securities and Exchange Board of India stated, “The Interim Order was issued based on initial findings to stop further fraudulent trading and prevent the misappropriation of gains totaling INR 244.09 lakh (as detailed in the Interim Order). After reviewing the arguments presented by the Parties, I find them insufficient to challenge the initial findings outlined in the Interim Order. Additionally, a thorough investigation is currently underway. Finding no reason to disagree with the initial findings, I confirm that the Parties have indeed front-run trades of the Big Client, thus violating section 12A (a), (b), (c), and (e) of the SEBI Act, as well as regulations 3(a), 3 (b), 3 (c), 3(d), 4(1), and 4(2)(q) of PFUTP Regulations as stated in the Interim Order.

The individuals involved are Yogesh Garg, employed in LIC’s investment department, along with his mother Sarita Garg, mother-in-law Kamlesh Agarwal, Ved Prakash HUF, and Sarita Garg HUF.

They received the interim order on April 27, 2023. The regulator has seized illegal gains totaling over Rs 2.44 crore. Additionally, they have been barred from participating in the securities market until further notice.

The regulator initiated investigations upon receiving surveillance alerts regarding potential front running by the individuals involved, spanning from January 2022 to March 2022. They scrutinized trades conducted between January 1, 2020, and March 15, 2022.

LIC clarified that the issue pertains to an old case of front running. They emphasized implementing strong controls and best practices to prevent such activities. Additionally, LIC mentioned stringent measures in the dealing room, including biometric entry, CCTV coverage, and restrictions on electronic devices.

The insurer also stated that the disciplinary authority has taken appropriate action against the involved official by removing them from the corporation’s services following proper administrative procedures.

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