SEBI confirms involvement of LIC employee in front-running case

/2 min read

ADVERTISEMENT

LIC says it has placed robust controlling mechanisms along with best practices to prevent any kind of front running
SEBI confirms involvement of LIC employee in front-running case
Appropriate action against the concerned official has been taken by disciplinary authority, says LIC Credits: Fortune India

The Securities and Exchange Board of India (SEBI) has confirmed the involvement of five entities including an employee of Life Insurance Corporation of India (LIC) in a case about front-running trades of the state-owned insurer.

Front-running is an unlawful practice in the equity market where an entity trades based on advanced information from a broker or analyst before the information has been made available to its clients.

In April 2023, SEBI banned five entities, including an employee of LIC, from the securities market and impounded illegal gains of ₹2.44 crore made by them.

SEBI clarifies that the restraint imposed through the interim order dated April 27, 2023, on Yogesh Garg, Sarita Garg, Kamlesh Agarwal, Ved Prakash HUF and Sarita Garg HUF from buying, selling or dealing in securities either directly or indirectly, in any manner whatsoever, shall continue until further orders.

fortune magazine cover
Fortune India Latest Edition is Out Now!
The Year Of EV Launches

September 2025

2025 is shaping up to be the year of electric car sales. In a first, India’s electric vehicles (EV) industry crossed the sales milestone of 100,000 units in FY25, fuelled by a slew of launches by major players, including Tata Motors, M&M, Ashok Leyland, JSW MG Motor, Hyundai, BMW, and Mercedes-Benz. The issue also looks at the challenges ahead for Tata Sons chairman N. Chandrasekaran in his third term, and India’s possible responses to U.S. president Donald Trump’s 50% tariff on Indian goods. Read these compelling stories in the latest issue of Fortune India.

Read Now

They have been asked to "cease and desist" from engaging in any fraudulent, manipulative or unfair trade practice, including front-running.

“The Interim Order was passed based on the prima facie conclusions to prevent further perpetration of fraudulent trading activity and to prevent defalcation of the wrongful gains cumulatively amounting to INR 244.09 lakh (as elaborated in the Interim Order). In view of the reasons discussed in preceding paragraphs, I find that the submissions of the Noticees are insufficient to refute the prima facie conclusions drawn in the Interim Order. I further note that a detailed investigation is ongoing in the present matter. I see no reason or grounds to differ from the prima facie findings in the Interim Order, and therefore, the finding in the Interim Order that the Noticees have prima facie front run the trades of Big Client resulting in violation of section 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 PFUTP Regulations stands confirmed,” says SEBI's whole time member Ananth Narayan G.

Responding to this, LIC says, “We have further placed robust controlling mechanisms along with best practices to prevent any kind of front running.”

“All stringent measures for transactional hygiene of the dealing room are put in place, i.e., entry by biometric, cctv coverage, restriction on electronic gadgets etc,” the state-owned insurer says.

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, it adds.

“LIC has always been in the forefront of being a compliant organisation and we will continue to strengthen further on all issues of Corporate Governance,” it says.

Yogesh Garg is still associated with LIC. SEBI was informed by LIC that Garg has been transferred from the investment department of the company to another department of the insurance firm.

Fortune India is now on WhatsApp! Get the latest updates from the world of business and economy delivered straight to your phone. Subscribe now.