Sebi bans Ketan Parekh, 2 others from markets in front-running scam, impounds Rs 65 crore
Jan 2, 2025
Synopsis
SEBI barred Ketan Parekh, Rohit Salgaocar, and others from Indian capital markets for a front-running scam, impounding ₹65.77 crore. Parekh, notorious for the 2001 stock scam, faces fresh restrictions alongside key associates.
Market regulator Securities and Exchange Board of India (Sebi) on Thursday barred Ketan Parekh and Singapore-based trader Rohit Salgaocar from accessing the Indian capital markets after finding them involved in a front-running scam.
In an interim order, the regulator further directed impounding of an amount of Rs 65.77 crore from Parekh, Salgaocar and 20 other accused, ruling that they had earned it as "unlawful gain".
Parekh is infamous for a stock market scam which led to the market crash in 2001 .
"Noticees no. 1 and 2 i.e. Rohit Salgaocar and Ketan Parekh devised the entire scheme to unjustly enrich from the NPI pertaining to the Big Client by orchestrating front running activities. Noticee no. 10 (Ashok Kumar Poddar) has admitted to be a facilitator in the front running activities. Further, Noticees no. 2 and 10 i.e. Ketan Parekh and Ashok Kumar Poddar had been prohibited from dealing in the securities and debarred from associating with the securities market in the past as well. Considering the same, Noticees no. 1,2 and 10 shall be restrained from buying, selling or dealing in securities or associating with any intermediary registered with SEBI, either directly or indirectly, with immediate effect," a 188-page order issued by Sebi's Whole-time Member Kamlesh Varshney stated.
The order came following an investigation conducted by Sebi for the period between January 1, 2021 and June 20, 2023 in which the accused were found to he unjustly enriching themselves from the NPI (non-public information) pertaining to an overseas entity engaged in the business of Foreign Portfolio Investment.
According to the order, "Traders of the Big Client (a fund house where Salgaocar had close connections) were discussing with Rohit Salgaocar prior to executing trades and such information was prima facie encashed by Rohit Salgaocar by sharing the same with Ketan Parekh. While the traders of the Big Client were discussing trades with Rohit Salgaocar for ensuring counter parties for their trading, Rohit Salgaocar was using that information to make illegal profits by routing information to Ketan Parekh. When the information reached Ketan Parekh, he acted in a systematic manner and trades were executed in different accounts which cumulatively generated unlawful profits. Ketan Parekh is not an ordinary person. As discussed later, he was debarred from the securities markets for 14 years earlier also".
The whole operation and investigation was novel for the information flow, how Parekh used his earlier network of Kolkata based entities for front-running the trades, and how the main players were operating outside the regulatory ambit.
The Sebi investigation found that Parekh was executing non-public information (NPI) based trades through accounts of the six front-runners (FRs) and three facilitators. There were 11 directors associated with these 6 front-running entities, the Sebi investigation found.
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[The Economic Times]
