Sebi bars Ketan Parekh and 2 others from market in front-running scam, Rs. 65 crore seized

Market regulator Securities and Exchange Board of India (Sebi) on Thursday barred Ketan Parekh and Singapore-based businessman Rohit Salgaokar from entering the Indian capital market after it was found involved in a front-running scam.

In an interim order, the regulator ordered Parekh, Salgavkar and 20 other accused to pay Rs. 65.77 crore, and ruled that they had received it as “illegal gain”.

Parekh is infamous for the stock market scandal that led to the market crash in 2001.

“Notice Nos. 1 and 2 i.e. Rohit Salgavkar and Ketan Parekh organized front running activities to unjustly enrich a large client from NPI. Front running activities, Notice Nos. 2 and 10 i.e. Ketan Parekh and Ashok Kumar Poddar was debarred from dealing in securities and in view thereof, notice no. Any intermediary registered with SEBI, directly or indirectly, with immediate effect,” said Kamlesh Varshney, Whole Time Member of SEBI, in the 188-page order issued by

The order came following an investigation by SEBI for the period between January 1, 2021 and June 20, 2023, which found the accused had unjustly enriched themselves from NPI (non-public information) relating to foreign entities. Foreign portfolio investment business.

According to the order, “Traders of the big client (a fund house with which Salgaokar has close links) were discussing with Rohit Salgaokar before executing trades and such information was prima facie intercepted by Rohit Salgaokar sharing with Ketan Parekh. While the traders of the big client Discussing trade with Rohit Salgavkar to ensure counter parties for his trade, Rohit Ketan Parekh While Salgavkar was using that information by passing it on, he worked systematically and traded in various accounts, which Ketan Parekh is no ordinary person.As discussed later, he was excluded from the securities market even 14 years ago “.

The entire operation and investigation was novel for the flow of information, how Parekh used his earlier network of Kolkata-based entities to front-running trades and how key players were operating outside the regulatory ambit.

Sebi’s investigation revealed that Parekh was running non-public information (NPI) based trades through the accounts of six front-runners (FRs) and three facilitators. SEBI’s investigation revealed that 11 directors were associated with these 6 front-running entities.

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