The recent SEBI order against Rohit Salgaocar and Ketan Parekh highlights a sophisticated scheme of front-running trades involving a US-based fund house. This novel method of front-running, different from the usual cases, was orchestrated by the duo over a period of 2.5 years, resulting in wrongful gains of around ₹66 crore.
Rohit Salgaocar, a Singapore-based trader, had access to trade-related information of the US-based fund house, which he shared with Ketan Parekh, a stock market operator previously involved in the 2000 Stock Market Scam. Parekh then utilized his network of Kolkata-based entities to build positions based on this information, eventually matching them with the orders of the US-based fund.
What sets this case apart is the altered approach taken by Salgaocar and Parekh to operate outside regulatory scrutiny. Parekh communicated with associates through WhatsApp, frequently changing his mobile numbers and buying in the names of fake entities to avoid detection. Salgaocar played a key role in instructing Indian trading members to place orders on behalf of the US-based fund, receiving kickbacks in return.
SEBI’s exhaustive 189-page order details the intricate modus operandi, flow of information, communication methods, and financial transactions involved in the scam. The regulator conducted search and seizure operations across Kolkata and Mumbai to uncover this fraudulent scheme.
This case sheds light on the evolving tactics used by market manipulators to exploit loopholes in the system and underscores the importance of regulatory vigilance in detecting and preventing such activities. As SEBI continues to crack down on securities market violations, it serves as a reminder of the ongoing challenges in maintaining the integrity of financial markets.
