Sebi Bans Ketan Parekh, 2 Others in Front-Running Case

New Delhi, Jan 2 (PTI) Markets regulator Sebi on Thursday barred three individuals, including Ketan Parekh, from the securities markets with immediate effect for their alleged involvement in a front-running scheme which generated illegal gains of Rs 65.77 crore.

Further, Sebi directed 22 entities, including Parekh, to impound unlawful gains worth Rs 65.77 crore earned from the alleged violations, jointly and severally.

The regulator also restrained Ketan Parekh, Rohit Salgaocar and Ashok Kumar Poddar from associating with any intermediary registered with Sebi, either directly or indirectly, with immediate effect.

Sebi issued show cause notices to 22 entities, including Parekh, Salgaocar and Poddar as to why suitable directions, including direction to disgorgement, debarment and imposition of penalty will not be passed.

These entities have to file their replies to Sebi within 21 days from the date of receipt of this order, the regulator said.

In a 188-page interim order, Sebi said "Rohit Salgaocar and Ketan Parekh devised the entire scheme to unjustly enrich from the NPI (Non-Public Information) pertaining to the big client by orchestrating front-running activities".

The regulator noted that Ashok Kumar Poddar has admitted to be a facilitator in the front-running activities.

On modus operandi adopted by Ketan Parekh and others, Sebi observed that prior to the execution of suspicious trades, the Front Runners (FRs) were receiving trade instructions through WhatsApp chats or calls from a person whose contact number(s) was saved in the devices as Jack/Jack New/Jack Latest New/Boss, etc.

Upon analysis of these contact numbers, it was found that these numbers belonged to Ketan Parekh who was receiving NPI from one, Rohit Salgaocar. After receiving specific and timely instructions, directly or indirectly, from Ketan Parekh, the FRs used to execute orders and made unjust profits.

Accordingly, Ketan Parekh and Ashok Kumar Poddar had been prohibited from dealing in securities and debarred from associating with the securities market in the past as well.

Considering the same, Salgaoncar, Parekh and Poddar will be restrained from buying, selling or dealing in securities or associating with any intermediary registered with Sebi, either directly or indirectly, with immediate effect, the order said.