The Securities and Exchange Board of India (SEBI) has issued show-cause notices to six foreign portfolio investors (FPIs) associated with the US-based asset manager Capital Group as part of an ongoing investigation into front-running activities. The FPIs in question include the American Funds Insurance Series Growth-Income Fund, American Funds Fundamental Investors, Smallcap World Fund, The Growth Fund of America, AMCAP Fund, and the Capital Group AMCAP Fund (Lux).
Capital Group has refrained from commenting due to the ongoing nature of the investigation, while SEBI has yet to respond to inquiries.
The inquiry originates from an interim order issued by SEBI in 2025, which implicated Singapore-based trader Rohit Salgaocar and Ketan Parekh. The regulator claimed that confidential information regarding the trades of a significant client was used for front-running in the market. Notably, SEBI did not name Capital Group in its interim order.
According to SEBI, Salgaocar, who serves as a director at Strait Crossing, allegedly received sensitive information concerning impending trades from two traders associated with Capital Group. This information was reportedly disseminated to a network of traders linked to market operator Ketan Parekh. Salgaocar had a referral agreement with Indian intermediaries Motilal Oswal Financial Services and Nuvama Wealth Management, whereby he referred the client’s trades to them.
Salgaocar has filed an appeal against SEBI’s interim order, with the case currently being heard by the Securities Appellate Tribunal (SAT). In a ruling last November, SAT permitted Salgaocar’s request for cross-examination of Ketan Parekh and instructed SEBI to establish a date for the cross-examination process.
Legal experts suggest that this case could influence institutional investors and intermediaries, prompting increased scrutiny of internal controls and information-sharing practices during large institutional trades. Analysts indicate that the outcome may also reshape regulations surrounding communication protocols and access to trade-related information within institutional trading operations.
Published on May 21, 2026.
