Dharmesh Thakkar mumbai

The market regulator has blown the lid off another scam run by stock market operator Ketan Parekh and impounded Rs 67 crore for orchestrating a front running of trades on insider information for last two and half years. 

Parekh was earlier convicted of price manipulation and circular trading in the stock market scam of 2000 and barred from the securities and capital markets for 14 years.

Securities and Exchange Board of India (SEBI), in an interim order issued on January 2, detailed the investigation that spanned over 20 locations and impounded unlawful gains of around Rs 65.77 crore. The order was passed against 22 entities.

The 188-page interim order against 22 individuals and entities has directed disgorgement of Rs 65.77 crore of illegal gains made through the alleged front running scheme naming  front-runners, stock brokers, facilitators and directors of several other firms.

The market regulator has alleged that Ketan Parekh using pseudonyms like “Jack,” “Jack New,” and “Boss,” received inside information via WhatsApp and passed on specific trading instructions to execute the trades via his extensive network to make killings on the stock market.

The regulator analysed chats, messages, mobile phone locations, IMEI numbers, hotel bookings, and even birthday messages to confirm Ketan Parekh's identity.

The probe exposed the alleged Rs 65.77 crore front-running scam, naming disgraced stock market operator Ketan Parekh and Singapore-based trader Rohit Salgaonkar as key players leveraging non-public information (NPI) related to trades by a major US-based fund house, referred to as "Big Client," whose funds are registered as Foreign Portfolio Investors (FPIs) in India.

The SEBI investigation found that Ketan Parekh was executing non-public information (NPI) based trades via accounts of the six front-runners (FRs) and SEBI showed a diagrammatic representation of information flow from Ketan Parekh to FRs for execution through their trading accounts.