LIC Insider Shockingly Involved in Front-Running gains 2.4 crores

SEBI, the market regulator, confirmed on March 19th the involvement of a Life Insurance Corporation of India (LIC) employee in front-running a significant client’s trades. In its confirmatory order, SEBI stated, “The Interim Order was issued based on prima facie conclusions to prevent further fraudulent trading activity and the defalcation of gains totaling INR 244.09 lakh (as detailed in the Interim Order). Given the insufficiency of the Notices’ submissions to refute the prima facie conclusions, and considering the ongoing detailed investigation, the findings of the Interim Order remain unchanged.”

The individuals implicated include Yogesh Garg, formerly with LIC’s investment department, along with his mother Sarita Garg, mother-in-law Kamlesh Agarwal, Ved Prakash HUF, and Sarita Garg HUF. The interim order, served on April 27, 2023, has led to the regulator impounding illegal gains exceeding Rs 2.44 crore, with the noticees barred from accessing the securities market until further notice.

SEBI initiated investigations following surveillance alerts regarding potential front-running by the noticees between January 2022 and March 2022, scrutinizing trades from January 1, 2020, to March 15, 2022. LIC responded to the matter, stating it was an old case of front-running and highlighting the implementation of robust controls and best practices to prevent such incidents, including biometric entry, CCTV coverage, and restrictions on electronic devices in dealing rooms.

Furthermore, LIC disclosed that appropriate disciplinary action had been taken against the implicated employee, resulting in their removal from the corporation following due administrative procedures.