The Securities and Exchange Board of India (SEBI) has imposed severe penalties on Ketan Parekh, a notorious stock market operator, and two other entities involved in a front-running scam. On Monday, SEBI debarred Parekh, along with Rohit Salgaocar, a Singapore-based trader, and several others, from participating in the stock market. Additionally, the market regulator has confiscated Rs 65.77 crore in illegal profits derived from the fraudulent activities.
Parekh has a history in market manipulation
Parekh, who has a history of market manipulation, had previously served a prison sentence and was banned for 14 years following the infamous 2000 stock market scam. This time, Parekh and Salgaocar were found guilty of orchestrating a sophisticated front-running scheme targeting a major US-based fund managing around $2.5 trillion globally.
Salgaocar, while consulting with the fund’s traders, used confidential trade information to pass on to Parekh, who then executed trades in a manner that generated unlawful profits. SEBI’s 188-page interim order has identified 22 entities involved in the scam, with Parekh and Salgaocar at the center.
Salgaocar had a referral agreement with Motilal Oswal Financial Services and Nuvama Wealth Management, helping funnel trades from the US fund to them. The traders of the fund consulted Salgaocar before placing orders in the Indian market, granting him access to sensitive, non-public information. This allowed Parekh and Salgaocar to manipulate stock prices and carry out their illegal scheme.
SEBI’s investigation, which included a search and seizure operation across Kolkata and Mumbai, revealed a pattern of matching trades between the Big Client and the front-runners, indicating that these traders were privy to confidential trade instructions. The scam, which exploited insider information, was meticulously orchestrated outside the regulatory framework, with Parekh and Salgaocar running the operation through a network of associates.
SEBI has imposed strict actions, underscoring its commitment to tackling market manipulation and protecting the integrity of Indian financial markets.
