SEBI Takes Action Against Ketan Parekh and Rohit Salgaocar: 20 Others Also Targeted – Market Impact
The Securities and Exchange Board of India (SEBI) recently took action against 22 entities, including individuals like Rohit Salgaocar and Ketan Parekh, in connection with a front-running scam. SEBI has barred these entities and seized wrongful gains totaling Rs 66 crore, imposing a ban lasting 14 years.
This case revolves around front-running, where individuals and entities use non-public information to make trades based on upcoming major transactions of a foreign portfolio investor known as the “Big Client.” This specific case is linked to a US-based FPI managing a substantial USD 2.5 trillion globally.
It has been alleged that Rohit Salgaocar shared trade information with Ketan Parekh, who then utilized a network based in Kolkata to establish and close off positions related to these trades. Salgaocar reportedly shared crucial details with traders of the Big Client, directing them to specific Indian Trading Members for trade execution, with about 90% of these trades being executed by Motilal and Nuvama.
This scheme ran for 2.5 years and was uncovered through SEBI’s investigative efforts, which utilized various tools such as Angadiyas, WhatsApp chats, and fictitious entities. Ketan Parekh was found to frequently change his WhatsApp numbers and communicated through this platform.
Entities like GRD Securities Limited and Salasar Stock Broking Limited were involved in executing questionable trades, with directors and facilitators utilizing multiple trading accounts to carry out these operations. SEBI also discovered that orders from the Big Client were routed through Motilal and Nuvama, with Rohit Salgaocar dictating crucial instructions regarding the execution of these orders.
It was revealed that SCPL, a company owned by Salgaocar, had a referral agreement with Nuvama and Motilal to share revenue generated from the brokerage earned on trades referred by SCPL.
It’s important to note that Ketan Parekh has a history of market manipulation offenses and was previously found guilty of manipulative trading practices that contributed to the stock market crash in 2001.
