SEBI is investigating Choice Broking. The market regulator suspects Choice Broking's employees of front-running in trades involving big clients. This information was given by people associated with the matter. Sources said that SEBI raided the brokerage firm's Mumbai office. This action was taken between 6 and 10 January. Choice Broking has denied any such action. It has said that the action being talked about is part of the brokerage firm's regular interaction with SEBI.
Choice Broking refuses SEBI investigation
Choice Broking has said that no search and seizure action has been taken by SEBI against Choice Equity Broking. It has said that being a regulated entity, Choice Broking regularly stays in touch with SEBI and other authorities. Its aim is to comply with all regulatory requirements. Sources told Moneycontrol that the investigation conducted by SEBI's surveillance department is related to alleged suspicious trading activity.
Parallel system was created for front running
According to sources, SEBI officials had gone to investigate front-running of a big client. But evidence was found which showed that the employees of the brokerage firm were involved in front-running the trades of many big clients. A person associated with the matter said that it seems that a parallel trading system was created for this (front running). This trading system would have been used before punching the big orders of the dealer's clients.
Front running activities are illegal
Front running occurs when a person or entity has such information which other people do not have. He can use this information to take advantage of the trade of a big client. Trade here means buying and selling of securities. Due to this, a big investor or client may have to suffer a big loss. Such activities are considered illegal. If any employee or entity is involved in such activity, action can be taken against him.
