Admissions by both tipper and tippee and corroborated financial transfers establish liability for front-running.

SEBI conducted an investigation into the trading activities of Vikas Sarda, his wife Preeti Sarda, and Vikas Sarda (HUF) between January 1, 2022, and June 30, 2023, following suspicions of front-running.

Investigation revealed that Ashish Sarda, an employee at Thar Share Brokers and cousin of Vikas Sarda, acted as an "information carrier" by providing tips regarding upcoming large orders from "Big Clients".

Call Data Records (CDRs) showed frequent communication between Vikas and Ashish prior to order placements, and bank statements confirmed weekly payments of approximately ₹13.86 lakhs from the appellants to Ashish as "commission" for these tips.

The Adjudicating Officer (AO) passed an order on November 28, 2024, directing disgorgement of ₹1.43 crore, imposing debarment, and levying a penalty of ₹5 lakhs each.

The appellants challenged this order, primarily arguing family connections do not prove fraud and seeking cross-examination of Ashish Sarda.

Whether the appellants engaged in front-running activities in violation of the SEBI (Prohibition of Fraudulent and Unfair Trade Practices) Regulations based on information provided by an insider.

Whether the non-granting of cross-examination of the information carrier (Ashish Sarda) vitiated the proceedings.

Whether the penalties and disgorgement directions imposed by the AO were proportionate and legally sustainable.

The Tribunal applied Section 15HA of the SEBI Act, 1992, which mandates penalties for fraudulent and unfair trade practices.

It further relied on the SEBI (Prohibition of Fraudulent and Unfair Trade Practices) Regulations (PFUTP Regulations), which require evidence of "fraud or deceit"—interpreted here through trading patterns and tipping.

Regarding procedural fairness, the Tribunal referenced the principle that cross-examination is not an absolute right if the evidence (such as statements on oath) is corroborated by undisputed documentary evidence like bank records and CDRs.

The Tribunal found that the connection between the tipper (Ashish) and the tippees (Appellants) was established through both familial ties and clear financial transactions.

Vikas Sarda admitted in his statement on oath that he received tips from Ashish and paid him weekly commissions.

This admission, combined with Ashish Sarda’s own testimony regarding his role as a dealer privy to Big Clients' trades, created a conclusive link of front-running.

The Tribunal rejected the plea for cross-examination because the appellants had not requested it during the original AO proceedings and because their own admissions corroborated Ashish’s statement, rendering further examination unnecessary.

The synchronized trading pattern and the unexplained "commission" payments further substantiated the charge of unethical market practice.

It held that the evidence of front-running was sufficiently established by the statement of the appellants, the financial trail, and the trading sync with institutional clients.

The Tribunal sustained the direction for disgorgement of ₹1.43 crore on a joint and several basis, the market debarment, and the penalty of ₹5 lakhs per appellant under Section 15HA, noting the penalty was already at the statutory minimum.