Economic Fraud
SEBI Exposes Front-Running Scandal Involving Ketan Parekh, Tiger Global Trades in PB Fintech
MUMBAI: In a dramatic revelation, the Securities and Exchange Board of India (SEBI) has unearthed a front-running scam involving veteran market operator Ketan Parekh, Singapore-based trader Rohit Salgaocar, and others.
The scam centers on trades linked to US-based investment giant Tiger Global’s sale of PB Fintech shares, the parent company of Policy Bazaar.
Inside the Front-Running Operation
SEBI’s investigation revealed that Parekh and his associates exploited non-public information about Tiger Global’s planned trades to profit illegally. The group allegedly used WhatsApp chats to coordinate their actions.
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Screenshots from these chats, included in SEBI’s 188-page order, show Parekh instructing others on trading strategies for PB Fintech shares.
Tiger Global sold 52.5 lakh shares of PB Fintech via two of its funds. SEBI’s data shows that GRD Securities, Salasar Stock Broking, and Anirudh Damani matched trades for 20.61 lakh shares with Tiger Global’s transactions.
Further investigation revealed that Tiger Global’s entities—Tiger Global Eight Holdings and Internet Fund III Pte Ltd—had collectively sold 1.23 crore shares of PB Fintech in 2022. This included 32.84 lakh shares sold on the NSE at Rs 388.34 per share.
The Chronology of the Scam
The order highlights a detailed timeline of events. Salgaocar, who consulted with Tiger Global before certain trades, passed sensitive information to Parekh. Parekh then relayed instructions in WhatsApp groups, including one named “Jack-Saro.”
SEBI uncovered that on the morning of November 11, Salgaocar was informed by Tiger Global’s trader about the planned sale of PB Fintech shares. Salgaocar immediately passed this information to Parekh, who issued multiple sell instructions to his associates before the market opened.
Salasar Stock Broking confirmed the execution of a buy order for 5.8 lakh shares on the BSE, with 5.79 lakh trades matching Tiger Global’s sell orders.
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SEBI Cracks Down
SEBI referred to Tiger Global as the “Big Client” in its order, refraining from naming the specific fund initially. The regulatory body has also highlighted the illegal nature of front-running, a practice where traders capitalize on confidential information to manipulate stock prices and gain undue profits.
This revelation adds to Ketan Parekh’s history of market manipulation and raises serious concerns about insider trading practices. SEBI has already impounded Rs 65.77 crore in connection with the scam, signaling its commitment to ensuring market integrity.
This case underscores SEBI’s vigilance in cracking down on unethical trading practices, ensuring that market operators and entities adhere to the highest standards of transparency and fairness.
