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Eavesdropping Over Profits: SEBI Unmasks a Low-Tech Front-Running Scam in Mumbai

In a financial world brimming with algorithms and sophisticated trading tools, you’d expect market manipulation to come dressed in high-tech disguise. But sometimes, all it takes is a thin wall, a sharp ear—and a willingness to cross the line. That’s the core of what SEBI has uncovered in the Madhav Stock Vision Pvt Ltd (MSVPL) front-running case, and the details are both audacious and alarmingly simple.

How Did This Scam Really Work?

Four Brokers. One Big Client. And Thin Walls.

Between April 2020 and December 2023, a major institutional investor was routing large trades through four empaneled brokers, all working out of the same commercial building—Kemp Plaza in Malad West, Mumbai.

You’d think a location like that would be secure, especially when you’re dealing with crores in trades. But here’s the twist: the trading desks were so physically close that confidential client conversations could be overheard. No hacking. No digital snooping. Just old-school eavesdropping.

The Inside Job

Two individuals—Jyotiswaroop Nandkishore Purohit and Pankit Bhagwati Jhaveri—were the link between the institutional client and MSVPL. They had direct access to non-public information about which stocks were going to be traded and in what quantity. Before those orders officially hit the market, they passed that information on to MSVPL’s dealer/director.

The Strategy: Beat the Big Guy to the Punch

Using pre-set strategies like SSB and BBS, MSVPL would quietly buy up stocks ahead of the big institutional order. When the client’s large volume moved prices—as such trades almost always do—MSVPL would sell off its position for a tidy, near-guaranteed profit.

Who Was Behind It—and Who Benefited?

This was no lone-wolf operation. Along with Purohit and Jhaveri, others played key roles:

Rajesh Bhagwati Jhaveri
Ajay Sampatraj Jain
Rajkumar Prabhu Damani

They helped execute the trades, move funds around, and disguise the profits as salaries paid out to friends and family members through related entities. SEBI estimates that over ₹2.72 crore in illicit gains were made this way.

There are even reports of discussions about planting a second mobile phone in a pocket to listen in on conversations from the next cabin. It was crude, but effective.

SEBI’s Findings—and What Came Next

SEBI’s investigation left little room for doubt. They uncovered:

Thousands of call logs
WhatsApp chats
Voice recordings

All pointing to one thing: this wasn’t a coincidence or accidental overlap. The group knew exactly what trades were coming, when, and how to profit from them.

On April 23, 2025, SEBI issued a strong response:

Immediate ban on MSVPL and five others from participating in the securities market.
Show-cause notices issued.
Disgorgement of ₹2.72 crore, the total estimated illegal gains.

The case falls squarely under violations of the SEBI Act and Prohibition of Fraudulent and Unfair Trade Practices (PFUTP) Regulations.

Why This Case Really Matters

At its heart, front-running undermines the very principle of market fairness. It gives insiders an unfair edge, distorts prices, and chips away at investor trust—especially when big institutional trades are quietly front-run for personal gain.

What makes the MSVPL case so unsettling is how low-tech the scheme was. It didn’t take insider passwords or spyware—just physical access, misplaced trust, and poor internal controls.

A Warning to Firms—and a Message from SEBI

This case should serve as a wake-up call for brokers, institutional clients, and trading firms. When your trading desks are inches apart, and information flows too freely across partitions, you’re inviting trouble.

SEBI’s swift action sends a clear message: manipulation, whether through code or conversation, won’t go unchecked. The regulator’s increasing reliance on surveillance data—and its willingness to act fast—should be taken seriously.

For investors, this is a reminder that market integrity needs constant vigilance. And for firms, it’s time to take a hard look at how information is shared within their own walls—literally and figuratively.