Ketan Parekh has once again been caught in the act! The Securities and Exchange Board of India (SEBI) has uncovered an unusual front-running scam, resulting in the impoundment of Rs 65.77 crore.
The market regulator has uncovered an unusual front-running scam involving Ketan Parekh, a stock market operator who was previously imprisoned and then banned from the securities market for 14 years due to his involvement in the 2000 scam, and a Singapore-based trader named Rohit Salgaocar.
In an interim order issued on January 2, the Securities and Exchange Board of India (SEBI) detailed an investigation that spanned over 20 locations and seized unlawful gains of approximately Rs 65.77 crore. The order was issued against 22 entities.
SEBI’s Whole-time Member Kamlesh Varshney stated in the order that Rohit Salgaocar and Ketan Parekh devised a scheme to profit unjustly from non-public information related to a Big Client by engaging in front-running activities. Ashok Kumar Poddar, identified as Noticee no. 10, admitted to facilitating these activities. Both Ketan Parekh and Ashok Kumar Poddar had previously been banned from trading securities and associating with the securities market. As a result, Rohit Salgaocar, Ketan Parekh, and Ashok Kumar Poddar are now prohibited from buying, selling, or dealing in securities or associating with any intermediary registered with SEBI, directly or indirectly, effective immediately.
According to the order, traders from the Big Client, a fund house with close ties to Salgaocar, were communicating with Rohit Salgaocar before executing trades. Salgaocar then shared this information with Ketan Parekh, who used it to make illegal profits by executing trades in various accounts. This systematic approach led to the generation of unlawful profits.
Ketan Parekh is no ordinary individual. As will be discussed later, he was previously banned from participating in the securities markets for a period of 14 years.
The entire operation and investigation were groundbreaking in terms of information flow, detection methods, and the activities of key players operating beyond regulatory boundaries.
The operation was brought to light when SEBI was in the process of developing a new alert system to identify trades based on privileged information. Salgaonkar, leveraging his connections, had access to information regarding trades to be executed by a major US fund. He facilitated trades for the fund by engaging various market participants, including foreign and Indian funds, other shareholders, and Ketan Parekh.
According to a statement he made, approximately 90% of the trades for the major client were executed solely by Ketan Parekh.
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Disclaimer: This blog post is for informational purposes only and should not be considered financial advice. Investors should conduct thorough research and consult with a qualified financial advisor before making any investment decisions.