Market regulator SEBI has exposed the front running scam, in which stock market operator Ketan Parekh also played a role. Ketan Parekh and Singapore trader Rohit Salgaonkar were jailed in a scam in 2000 and both of them were banned from entering the securities market for 14 years. The Securities and Exchange Board of India (SEBI) in its order issued on January 2 has given details about the investigation, which is related to 20 locations. During the investigation, approximately Rs 65.77 crore of ill-gotten gains were also seized. This order has been issued against 22 units.
The order issued by Kamlesh Varshney, Whole Time Member of SEBI, said, ‘Notice recipient No. 1 Rohit Salgaokar and Notice recipient No. 2 Ketan Parekh have misused the NPI of a big client (fund house) with the help of front running activities. Benefitted. Notice recipient number 10 (Ashok Kumar Poddar) has admitted to playing a role in front running activities. Further, notice recipients Nos. 2 and 10 Ketan Parekh and Ashok Kumar Poddar have been restrained from carrying out activities in the securities market. Both of them were earlier also banned from entering the securities market. Keeping this in view, Noticee Nos. 1, 2 and 10 are prohibited from buying, selling or other activities in securities or any intermediaries registered with SEBI with immediate effect.
According to the order, ‘Traders of the Big Client (fund house where Salgaonkar had close connections) were in talks with Rohit Salgaonkar before executing the deal and as per prima facie information, Salgaonkar passed this information on to Ketan Parekh. Benefited from it by sharing it together. Rohit Salgaokar was earning illegal profits by passing this information to Ketan Parekh. When this information reached Ketan Parekh, he took advantage of it and acted in a serial manner and trades were executed in different accounts and profits were made illegally.
The entire operation and investigation revealed how Parekh used his old network of Kolkata entities for front running the trade and how key players were operating outside the regulatory ambit.