SEBI fines Aqua Proof Rs 45 lakh for front-running KPIT Tech trades

The Securities and Exchange Board of India (SEBI) has penalised Aqua Proof Wall Plast Private Limited (APWPPL) and its director Naresh Chandra Bohra for front-running trades in the shares of KPIT Technologies Ltd.

SEBI has imposed a fine of Rs 40 lakh on APWPPL and Rs 5 lakh on Bohra for the violation.

The regulator found that APWPPL made illegal gains of Rs 19.52 lakh in 2017 by executing trades ahead of a large client’s order, a practice known as front-running, which is banned in India. SEBI did not estimate the exact investor losses but warned that such activity distorts market prices, erodes investor trust, and causes financial harm to large clients who get poorer execution rates.

The trades in question were originally done by Mehrangarh Financial Advisors Pvt Ltd (MFAPL), which later merged with APWPPL. The firm allegedly traded KPIT Technologies shares on July 26, 2017, based on non-public client information accessed through Anand Rathi Shares and Stock Brokers.

Here’s how it played out: MFAPL sold shares at around Rs 123.73, just before the big client placed its sell order. As soon as the client’s order hit the market and prices dropped, MFAPL bought the shares back at around Rs 120.20. The company made a profit of Rs 3.53 per share on 5.52 lakh shares in a single day. SEBI concluded that the firm had used privileged information to gain an unfair advantage in the market.

Also read: Axis MF's former Risk Head settles case with Sebi for tipping off relativesSebi also tracked a LinkedIn post to connect the links between various entities.