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SEBI on Thursday announced Rs. Front-running trade scam of Rs 1.3 crore exposed and ban on trading of eight companies ordered The details of how this scam was caught are very interesting. An image of a Rs 5 note was recovered from the mobile phone of a person involved in the scam and a thorough inquiry was conducted in this regard, which established that the scam was carried out.
If we look at the entire incident, Ashok Maheshwari was a dealer of a big brokerage company. Darshan Bakul Shah and CHL Stock Concept were associates of Maheshwari and were also authorized persons of two other brokerage firms. SEBI has not disclosed the names of these three brokerage firms. Now, Maheshwari was able to get preliminary information about the trades that a client of his brokerage firm, who had large amounts of trades, was going to make. Therefore he used to convey this information to Shah.
On receiving this information, Shah used to deal in shares of companies related to the accounts of his family members and other associates and thus earned huge profits. Now when the time came to distribute the profits, Shah used to send cash to Maheshwari through his courier Ganesh. Since this amount is to be given to Maheshwari, before sending the amount, Shah Maheshwari should have Rs. The picture of Rs 5 note was used to place the order on Telegram app. This picture was forwarded in Shah Ganesh's mobile. Now when Ganesh went to give money to Maheshwari, Maheshwari used to show him a five rupee note. Ganesh would compare this note with the picture on his phone and verify it and then give the cash to Maheshwari.
When SEBI investigated the matter on the basis of suspicion and started interrogating him, Shah's mobile was checked. From this mobile Rs. Photo of five rupee note found. Shah forgot to remove the photo of the note and revealed the whole secret during strict interrogation. Thus Rs. A picture of a five rupee note exposed the entire scam.
While looking into why Shah was questioned, SEBI observed for the first time that big client deals were being done in the company of which Maheshwari was an agent. The accounts from which these deals were being made were investigated to find out from which IP address the account deals were being made. This IP address was linked to Shah's home address, on the basis of which Shah was interrogated. SEBI said that under this scam, Maheshwari and his associates lost a total of Rs. A total of eight companies have been banned from trading after proving profits of Rs 1.3 crore from front running trading. SEBI also said in its order that technology has helped a lot in solving the case. It is noteworthy that the practice of cash delivery by verifying the number of the currency note is adopted by different firms because the number of any currency note is unique and it never matches with the number of another currency note.