Trading from mother's account was costly, fine of Rs 77 lakh was imposed, what was the mistake?

highlights

Front running is an illegal trade practice.

This is something like insider trading.

The Himachal case is between 2021 and 2022.

New Delhi. A few days ago, SEBI had imposed a fine of Rs 77 lakh on a man and his mother in Himachal Pradesh. He was accused of investing money in the market through front running. The young man was trading from an account opened in his mother's name. He was the nominee of this account and was using the account for himself. But the question is how can a penalty be imposed on someone for using his mother's account.

Actually, the young man had used his mother's account for front running. Front running is an illegal financial practice. Let us know what is the whole matter and what is the role of front running here?

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What is the matter?
This case is from 1 July 2021 to 30 June 2022. The young man had used his mother's account, opened in 2020, for trading. This person was working with a Radico NV Distillers. It was sent to Sapphire Interex on deputation. This young man is a technical analyst who gives his company's technical view along with news, announcements and international market movements. On the basis of its suggestions, the company chooses the sectors where money is to be invested. The company used to select stocks on the basis of these suggestions. Once the stock was decided, this person would ask a trader like his employer to place the order.

Till now everything was fine but after that, because of what this young man was doing, he got into trouble. The young man also bought his own personal shares on the basis of the charts he had prepared during his job. He did this trading from his mother's account. Market regulator SEBI termed it as front running and imposed a fine on both of them. The young man says that the trades made by him may be similar to the trades of the company but it was not done intentionally.

What is front running?
Front running is also called tailgating or forward running. This is similar to insider trading. In this, a broker or investor uses inside information of the company and future transactions to invest money in stocks. For example, a broker may invest in the shares that his company is going to buy before his firm does. SEBI has declared this illegal.

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