sebi
Published on 16 July 2025
SEBI Exposes Front-Running Scam Involving Ketan Parekh and Rohit Salgaocar
SEBI Unmasks ₹65 Crore Front-Running Scam Led by Ketan Parekh and Rohit Salgaocar
In a sweeping enforcement action that revives memories of India’s biggest market scandals, the Securities and Exchange Board of India (SEBI) on January 2, 2025, issued a detailed interim order exposing a complex front-running operation allegedly masterminded by Ketan Parekh—already a known name from the 2001 stock market fraud—and his associate, Rohit Salgaocar.
The scheme, which operated quietly across more than 20 locations, allegedly yielded illicit gains totalling ₹65.77 crore. SEBI has moved swiftly to freeze assets, impound profits, and bar 22 individuals and entities from the securities market—marking one of its most wide-ranging front-running crackdowns in recent years.
What SEBI Found: A Deceptively Sophisticated Network
Key Figures in the Scheme
- Ketan Parekh – Once again at the center of regulatory scrutiny, Parekh is accused of executing trades ahead of large institutional orders, turning advance information into illegal profits.
- Rohit Salgaocar – A Singapore-based trader who allegedly acted as the conduit for confidential trade data from a large U.S.-based fund house (referred to in the order as the "Big Client").
- Ashok Kumar Poddar – An associate who admitted to helping facilitate the trades and profit-sharing arrangements.
All three are now barred from participating in the securities markets and are prohibited from associating with any SEBI-registered intermediaries until further notice.
How the Front-Running Was Orchestrated
1. Access to Non-Public Information (NPI)
Salgaocar reportedly gained early access to large trade orders from the Big Client—particularly block trades involving PB Fintech shares. This information was passed to Parekh in advance of market execution.
Armed with this NPI, Parekh allegedly positioned trades via a ring of associated brokers and front accounts, effectively pre-empting the institutional investor’s activity.
2. Execution via Alias Communications
SEBI found that the trading instructions were relayed using pseudonyms like “Jack”, “Boss”, and “Wellwisher” over WhatsApp and phone calls. Multiple SIM cards and mobile devices were used to obscure identities.
According to SEBI, around 90% of the Big Client’s trades were front-run through this network, a claim backed by Salgaocar’s own admission during the probe.
3. Profit Distribution
The profits were reportedly routed through both digital transfers and cash. SEBI's order also noted the use of informal hawala-like channels and angadia couriers—trusted cash transporters frequently used in traditional trade circuits—to distribute funds among the accused entities and individuals.
Who’s Involved: Key Entities Named in SEBI’s Order
| Name | Role in the Scheme | SEBI Action |
|---|---|---|
| Ketan Parekh | Mastermind, trade executor | Barred from markets, assets frozen |
| Rohit Salgaocar | Information carrier | Barred from markets, assets frozen |
| Ashok Kumar Poddar | Facilitator | Barred from markets, assets frozen |
| 19 Other Individuals | Front-runners, enablers | Barred, assets frozen, gains impounded |
SEBI has impounded the entire ₹65.77 crore in estimated illegal gains, freezing all associated bank accounts to ensure no further dissipation of funds.
Why It Matters: Market Fairness and Repeat Offenders
This case holds deep significance for Indian capital markets on multiple fronts:
Repeat Offending by Ketan Parekh
Parekh had already been banned for 14 years following his role in the 2001 scam, which had severely impacted investor confidence. His re-emergence in a new-age front-running ring highlights persistent gaps in enforcement and monitoring of barred market participants.
Scale and Complexity
The network spanned across more than 20 cities, used alias identities, rotating SIM cards, and both formal and informal financial systems—signalling a worrying evolution in how market abuse is being carried out.
SEBI’s Strengthened Surveillance
SEBI’s detection of this scheme involved a multi-layered forensic approach—combining trade data analytics, mobile tracking, digital communications, and cross-border entity tracing. It’s a clear signal of the regulator’s increasing ability to connect dots across jurisdictions, technologies, and transaction modes.
Understanding Front-Running
Front-running refers to the illegal practice of trading based on advance knowledge of large, market-moving transactions—typically executed by institutional investors like mutual funds or foreign portfolio investors.
By getting ahead of these orders, the perpetrators profit from the inevitable price movement, often to the detriment of ordinary investors and the client behind the original trade.
Closing Thoughts: A Wake-Up Call for Market Participants
SEBI’s interim order doesn’t just penalise wrongdoing—it reflects a broader commitment to protecting market integrity. The use of encrypted chats, disposable phones, and traditional cash routes may have shielded this network for a while, but the regulator's investigation pierced through each layer of secrecy.
As investigations continue, more actions—including recovery proceedings, prosecutions, and deeper audits—are expected.
For Investors
This case is a sharp reminder to remain cautious of unusual market activity and to rely on verified, SEBI-registered advisors. It also underlines the importance of transparency, compliance, and ethical conduct in a market that is increasingly under the regulatory microscope.