The Security Exchange Board of India, India's market regulator, banned infamous scamster Ketan Parekh from participating in the stock market. In addition, the market watchdog has also proscribed other entities along with Parekh from activities in the market over a front-running scam.
Ketan Parekh Caught In Front-Running Scam
The SEBI order has named 22 entities including Ketan Parekh and Rohan Salgaocar.
The malpractice of entering into an equity (stock) trade, option, futures contract, derivative, or security-based swap in order to profit from advance, nonpublic knowledge of a large block pending transaction that will affect the price of the underlying security is called front running, sometimes referred to as tailgating.
Sebi has found Parekh, Salgaocar and others were not only front-running trades on Tiger Global stocks but were on the buying side when Tiger Global sold shares of PB Fintech. | Representative Image
How SEBI Cornered Parekh
SEBI or the Security Exchange Board of India has been under the radar of scrutiny for the past year and more. This has largely been the case due to the Adani fiasco, which has burst intermittently over the past 2 years or so.
This time, SEBI upped its game and nabbed him through a slipup.
Parekh's wife, Mamta's phone number and her Aadhaar card were found to be at the centre of all the happenings that led to this scam.
The agency tracked 10 of his fake numbers in order to nab his front-running scam.
According to reports, while Parekh did not get his hands wet directly, he deployed his lieutenants in Kolkata to get his deed done. The tainted stock broker used to instruct the front-runners using different mobile phones.
These numbers were registered under different, yet conspicuously suspicious names including ‘John’, ‘Bhai’, ‘Jack’, and even 'Boss'.
The 65-Crore Story
The duo of Parekh and Salgaocar devised a strategy for front-running the trades of a US fund firm, Big Client or FPI that looked after about USD 2.5 trillion worldwide.
Sebi has found Parekh, Salgaocar and others were not only front-running trades on Tiger Global stocks but were on the buying side when Tiger Global sold shares of PB Fintech. |
Sebi has found Parekh, Salgaocar and others were not only front-running trades on Tiger Global stocks but were on the buying side when Tiger Global sold shares of PolicyBazaar Fintech.
Through these illicit practices, involving his associate Rohit Salgaocar, Parekh made a lumpsome amount of Rs 65.7 crore illegally.
Parekh's Inglorious Past
Parekh's name first emerged for his involvement in the infamous stock market scam that trasnpired from 1998 to 2001. he was convicted in this case in 2008. He was a close associate of fraudster Harhad Mehta. For this scam, he was barred from the markets for 14 years and imprisoned. Recently, in 2018 Parekh was sentenced for a three-year jail term for violating a SEBI act.
