Securities and Exchange Board of India (SEBI) has barred Ketan Parekh and two others, Rohit Salgaocar and Ashok Kumar Poddar, from participating in the securities market for their involvement in a front-running scheme. The scheme, which generated illegal gains of ₹65.77 crore, was aimed at profiting from non-public information (NPI) related to trades of a US-based fund.
SEBI’s investigation revealed that Parekh received insider information from Salgaocar, who had access to trades from the foreign fund. Parekh passed this information to his associates, who executed front-running trades to make unlawful profits. The front-runners used WhatsApp messages and phone calls to coordinate these trades, leading to substantial gains.
Singapore-based trader Rohit Salgaocar, along with another individual, has been accused of front-running trades for a US-based foreign portfolio investor (FPI), which manages approximately $2.5 trillion in global funds.
A chain of operators was involved in front-running trades linked to US-based investment firm Tiger Global in PB Fintech shares, as confirmed by stock exchange data. The capital market regulator SEBI, in its January 2 order against veteran market operator Ketan Parekh, Singapore-based trader Rohit Salgaocar, and others, referred to Tiger Global as the “Big Client.”
Stock exchange data revealed that Tiger Global and its affiliated fund sold PB Fintech shares on November 11, 2022. While SEBI’s order identified PB Fintech, the parent company of PolicyBazaar, it did not disclose the name of the specific fund or entity whose trades were front-run, instead calling it the “Big Client.”
SEBI’s investigation further revealed that the group, including Parekh, Salgaocar, and others, not only front-ran the trades but also took buying positions as Tiger Global sold PB Fintech shares.
The regulator also directed that the ₹65.77 crore in illegal profits be impounded and shared between the involved entities. Additionally, Parekh, Salgaocar, and Poddar have been banned from associating with any registered intermediaries, either directly or indirectly, with immediate effect.
SEBI’s probe exposed Parekh’s use of multiple phone numbers and aliases to evade detection. By tracking IMEI numbers, SEBI linked these phones back to him, despite frequent number changes. Notably, one number under his wife’s name and another linked to him shared the same IMEI. Location data also revealed the phones were often at his Mumbai home.
A pivotal clue came from WhatsApp chats, where someone using the alias “Jack Latest” was wished a happy birthday, matching Parekh’s PAN card records. Cross-referencing this with travel and hotel data strengthened SEBI’s case. These advanced methods showcase SEBI’s growing expertise in cracking covert activities and protecting market integrity.
This case comes after an investigation covering trades from January 2021 to June 2023. SEBI found that Parekh, a known habitual offender who caused a major market crash in 2001, orchestrated the front-running scheme with the help of Salgaocar and Poddar. Parekh had previously been banned in 2003 for market manipulation, insider trading, and other violations.
The US-based fund, which was involved in this case, has various funds registered with SEBI as Foreign Portfolio Investors. SEBI’s decision is part of an ongoing effort to curb front-running activities in India’s booming stock market. Parekh and the other entities named in the order have been given 21 days to respond.
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