The Securities and Exchange Board of India (SEBI) has requested information from Capital Group regarding trades conducted by its entities in the Indian stock market that were flagged in a front-running investigation initiated in early 2025, according to sources familiar with the situation.
SEBI issued a show-cause notice to six entities registered as foreign portfolio investors in India, as reported by unnamed individuals due to the sensitivity of the information. This marks the first instance in which the U.S.-based investment firm Capital Group has been implicated in the ongoing case.
The regulator is investigating Capital Group’s alleged failure to maintain confidentiality regarding its trades in India. This inquiry is part of a 188-page interim order that identified former stockbroker Ketan Parekh and Singaporean trader Rohit Salgaocar as the primary figures orchestrating a scheme to front-run trades of a major client. Capital Group has declined to comment on the matter, citing the ongoing investigation, while SEBI has not yet responded to a request from Bloomberg.
According to an earlier report by the Economic Times, the investigation focuses on Capital Group’s trading activities in India from January 2021 to June 2023, during which SEBI detected a leak of information to Parekh and Salgaocar. Efforts to contact Parekh and Salgaocar for comments were unsuccessful.
SEBI’s investigation revealed that Parekh allegedly accessed non-public information about a substantial U.S. fund’s trades from Salgaocar, who was under an arrangement to refer trades to Motilal Oswal Financial Services Ltd. and Nuvama Wealth Management Ltd. Parekh reportedly shared this information with associates to facilitate front-running of the trades, as noted by SEBI member Kamlesh Varshney in the 2025 order.
Salgaocar has since appealed the interim order in a Mumbai court in November, with the outcome of the case pending.
Capital Group, which manages over $3 trillion in assets globally, has a long-standing involvement in India, owning stakes in several prominent companies including Bharti Airtel Ltd. and Maruti Suzuki India Ltd.
