Ketan Parekh’s Latest Market Manipulation Scandal
Ketan Parekh, a notorious figure in the Indian stock market, has found himself in trouble once again. The Securities and Exchange Board of India (SEBI) has uncovered a significant front-running scheme linked to Parekh, who previously served time for stock market manipulations. This time, he is accused of collaborating with Rohit Salgaocar, a Singaporean of Indian descent, to exploit insider information for illegal profits. The investigation has revealed a complex web of deceit involving multiple entities, leading to severe penalties for those involved.
The Scheme Unveiled
SEBI’s investigation into the front-running scheme has exposed how Parekh and Salgaocar operated. The scheme involved a large U.S.-based asset manager that had registered several funds with SEBI as foreign portfolio investors (FPIs). Salgaocar acted as a consultant for this fund, providing insights before they executed trades in India. This arrangement allowed him to gain an unfair advantage.
When Salgaocar received trade orders from the U.S. fund, he would relay these instructions to dealers at Motilal Oswal and Nuvama. However, before passing on the orders, he shared the same information with Parekh. This allowed Parekh to instruct his associates in Kolkata to execute trades based on this insider information, effectively front-running the legitimate trades made by the dealers at Motilal Oswal and Nuvama. This manipulation led to illegal gains amounting to nearly ₹66 crore.
SEBI’s Actions and Penalties
In response to the findings, SEBI has taken decisive action against Parekh, Salgaocar, and 20 other entities involved in the scheme. The regulator has barred them from participating in the stock market and has ordered them to repay the illegal profits. The total amount to be recovered stands at approximately ₹66 crore. SEBI’s interim order also includes freezing the demat and bank accounts of all implicated entities, preventing them from redeeming their mutual fund investments.
The investigation revealed that Parekh frequently changed his phone numbers to evade detection. His associates used various pseudonyms, such as “Jack,” “John,” and “Bhai,” to conceal their communications. This level of secrecy highlights the lengths to which Parekh and his network went to avoid scrutiny from regulatory authorities.
The Road Ahead for the Involved Parties
SEBI has given the involved parties 21 days to present their case and defend their actions. This period will be crucial for them to argue against the findings of the investigation. The implications of this case extend beyond the individuals directly involved; it raises questions about the integrity of the Indian stock market and the effectiveness of regulatory oversight.
As the investigation unfolds, it will be interesting to see how SEBI handles the defense put forth by Parekh and his associates. The outcome could set a precedent for future cases of market manipulation and insider trading in India. The financial community is watching closely, as the repercussions of this scandal could have lasting effects on investor confidence and market stability.
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