Sebi Imposes Ban on Ketan Parekh and Two Others for Alleged Front-Running Scheme Generating Rs 65.77 Crore

The Securities and Exchange Board of India (Sebi) has taken action against three individuals, including Ketan Parekh, for their alleged role in a front-running scheme. This scheme reportedly generated illegal profits amounting to Rs 65.77 crore. Sebi has barred these individuals from participating in the securities markets immediately.

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Additionally, Sebi has ordered 22 entities, including Parekh, to return the unlawful gains of Rs 65.77 crore. These entities are required to do so jointly and severally. The regulator has also prohibited Ketan Parekh, Rohit Salgaocar, and Ashok Kumar Poddar from associating with any intermediary registered with Sebi, either directly or indirectly.

Allegations and Show Cause Notices

Sebi has issued show cause notices to 22 entities, including Parekh, Salgaocar, and Poddar. These notices demand explanations as to why penalties such as disgorgement and debarment should not be imposed. The entities have 21 days from receiving the order to respond to Sebi's notice.

The interim order by Sebi spans 188 pages and details how Rohit Salgaocar and Ketan Parekh orchestrated the scheme. They allegedly used non-public information (NPI) related to a major client to carry out front-running activities for personal gain.

Modus Operandi Uncovered

Sebi's investigation revealed that Ashok Kumar Poddar admitted his role as a facilitator in these activities. The modus operandi involved receiving trade instructions via WhatsApp chats or calls before executing suspicious trades. These instructions came from a contact saved under various names like Jack or Boss.

Upon examining these contact numbers, it was discovered they belonged to Ketan Parekh. He was receiving NPI from Rohit Salgaocar and passing on specific instructions to execute orders for unjust profits.

Previous Restrictions and Immediate Actions

Ketan Parekh and Ashok Kumar Poddar have faced restrictions in the past for similar activities. Considering this history, Sebi has decided to restrain Salgaoncar, Parekh, and Poddar from buying or selling securities or associating with any registered intermediary immediately.

This decisive action by Sebi aims to uphold market integrity by preventing further misconduct by these individuals and entities involved in the scheme.