SEBI Unveils Ingenious Front-Running Scam: A Simple Hack with Big Consequences

The Securities and Exchange Board of India (SEBI) has uncovered a sophisticated front-running scam orchestrated by Madhav Stock Vision Pvt Ltd and its associates. This operation exploited a seemingly simple yet effective hack—physical proximity to sensitive trading information. By positioning themselves near the dealing desks of brokers handling large client orders, the perpetrators accessed non-public information (NPI) to execute trades ahead of the market, reaping illegal profits.

SEBI’s investigation revealed that the scam involved a network of individuals who acted as information carriers and facilitators. The unlawful gains, amounting to ₹2.72 crore, were routed through related entities disguised as employees. The market regulator has issued an interim order, banning the involved parties from trading and directing them to disgorge the illicit earnings.

This case underscores the vulnerabilities in the financial ecosystem and the innovative methods employed by fraudsters to exploit them. SEBI’s swift action not only highlights the importance of regulatory oversight but also serves as a deterrent to similar schemes in the future. The incident raises critical questions about the need for enhanced surveillance and stricter compliance measures to safeguard market integrity.