How Sebi nailed Ketan Parekh
Mumbai, Jan 5, 2025
Scam came to light after Sebi report indicated involvement of KP in front-running stocks
Ketan Parekh, the infamous stockbroker and key associate of scamster big-bull Hashad Mehta of the 2000-01 stock market scandal, for which he was imprisoned for years, is back to do what he is best at—manipulating the stock market.
Even as he was under the Sebi ban for 14 years from entering the market since 2003, KP, as he is known for, has been gaming the system—this time through front-running the stocks that Tiger Global holds in domestic companies, and mostly in PB Fintech.
How Sebi nailed him
Tracking the 10 fake phone numbers, including that of his wife Mamta’s that he shared with the front office of Sebi during his recent visits.
The latest scam came to light on January 2 when Sebi in a 188-page interim order by whole-time member Kamlesh Varshney, banned KP and 22 others including Singapore-based trader Rohit Salgaocar from market and ordered impounding of Rs 66 crore they illicitly gained from the scam.
KP didn’t do any trade this time too but got his Kolkata-based associates to do the job for him. KP used to instruct the front-runners using different mobile phones registered under different names and was known as ‘Jack’, ‘John’, ‘Boss’, ‘Bhai’ among other names.
The Sebi report doesn’t name Tiger Global, except saying KP and his associates were front-running in stocks held by a large USD-based portfolio investor, named the ‘Big Client’, BSE and NSE data show the affected fund is Tiger Global.
The Sebi used the screenshots of chats on trading instructions given by KP and his henchmen on November 11, 2022, to sell shares of PB Fintech, parent firm of online financial broker Policybazaar, using a slew of operators to front-run trades.
The Sebi has found Parekh, Salgaocar and others were not only front-running trades on Tiger Global stocks, but were on buying side when Tiger Global sold shares of PB Fintech. Front-running is an illegal practice of placing a personal trade based on non-public information about a large upcoming order that may impact the price movements.
As the findings, which match data from the exchanges, on November 11, 2022, two funds of Tiger Global (referred to as the Big Client in the report) sold 52.5 lakh shares of PB Fintech. GRD Securities, Salasar Stock Broking and Anirudh Damani (main three front-runners) have matched their trades with the Big Client for 20.61 lakh shares.
As per the BSE data, two Tiger Global entities—Tiger Global Eight Holdings and Internet Fund III which is a venture capital fund managed by Tiger Global Management—had together sold 1.23 crore shares of PB Fintech on that day. While Tiger Global Eight Holdings sold 76.13 lakh shares, Internet Fund sold 51.6 lakh shares and on NSE Tiger Global sold over 32.84 lakh shares on November 11, 2022, at a price of Rs 388.34.
The order highlighted the chronology of events wherein Salgaocar, with whom Tiger Global used to consult before placing certain orders, passed information to KP who then gave trading instructions in the WhatsApp groups. While the traders of the big client were discussing trades with Salgaocar to ensure counter-parties for their trading, Salgaocar was using that information to make illegal profits by routing information to KP.
When the information reached KP, he acted in a systematic manner, and trades were executed in different accounts, which generated unlawful profits of Rs 66.77 crore. Before market hours, Salgaocar and trader of the Big Client were discussing about Policy Bazar and trader of the Big Client confirmed to Salgaocar that they would sell Policy Bazar that day… from 9:00 am to 9:58 am, KP gave multiple instructions to sell the scrip at various price in the WhatsApp group ‘Jack-Saro’.
KP used front-runners
As per Sebi, KP was using 10 mobile numbers to do the act and one of the phone numbers matched the one obtained by KP on his wife’s Aadhar card and this was last nail for him even as he was under a Sebi ban since 2003 after the Harshad Mehta scam.
But KP, began his life as chartered accountant in the 1980s and soon launched his own brokerage Grow More, was operating from the shadows, using a network of hawala agents called angadias. But that cover was blown as Sebi followed the trail of his phone numbers, registered on different names.
[The New Indian Express]
