The watchdog can also bite

Many a times, one becomes cynical about the ways of justice and rule of law in India. Instances like the delayed process of law in the Bhopal Gas Tragedy lead one to question whether the rules and regulations really matter.

In such an environment it is heartening to see the painstaking investigation and action by SEBI in the matter of front running by a Mutual Fund dealer. Victims in fraud cases and in ponzi schemes are easy to identify and they are the ones who demand justice. On the other hand front running and insider trading are seen as what is called “victim less crimes”. It is difficult to precisely identify the victims of such crimes. The victims in such cases may not even be aware that they have been defrauded.

The current case was especially difficult to investigate as the front entities indulging in the trades had no apparent connection with the Mutual Fund in question. It must have been a difficult task indeed to have identified the connections and then to have confronted the individuals with the evidence. Cases of insider trading and front running have been difficult to prosecute in other countries as well. In the face of such odds SEBI seems to have done well in getting sworn admission of guilt from the accused in this matter.

Suspension of such individuals from the market and recovery of the ill gotten gains is only the start. One would want to see criminal prosecutions in such matters.

The is a warning to all those who indulge in insider trading, front running and market manipulation. The watchdog can also bite.

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