Ketan Parekh, known for causing a big stock market crash in 2001, is back in the spotlight with a serious financial scandal. The Securities and Exchange Board of India (Sebi) discovered that Parekh was involved in a scheme where he used secret information to make illegal stock trades, making Rs 65.77 crore unfairly.
How Sebi Caught Parekh
Sebi found a clue when they looked at a phone number linked to Parekh’s wife, Mamta. This phone number was part of a larger group of numbers that Parekh had registered under different names. These numbers were often found together at Parekh’s house in Mumbai, helping investigators track his activities.
When Parekh visited Sebi’s office on March 15, 2023, he handed in his Aadhar card, which had his wife’s phone number on it. Sebi used this to find a trail of calls and messages that revealed the illegal operations.
The Role of Front Runners
Using these phone numbers, Parekh and his associate, Rohit Salgaocar, communicated with people known as front runners. These front runners made trades based on secret information from Parekh, which he got from Salgaocar, who was working as a trader in Singapore.
Sebi discovered that Salgaocar had inside information about what a big overseas fund, called the “Big Client,” was planning to do. Parekh would share this information with the front runners, who would buy or sell shares before the Big Client’s trades, benefiting from changing prices.
Patterns in Illegal Trading
Sebi also found specific trading patterns that Parekh and his associates used. For example, in a pattern called “Buy-Buy-Sell,” the front runners would buy shares first, then let the Big Client make their purchase, raising the share price. After that, the front runners would sell their shares for a profit.
Sebi looked at trading records and messages to connect Parekh, Salgaocar, and the front runners. They found a WhatsApp chat where a suspect wished “Jack Latest” a happy birthday, proving Parekh’s involvement.
Brokers and Helpers
The investigation also spotted several brokers helping Parekh with this scheme, including companies like GRD Securities and Salasar Stock Broking. These brokers worked with traditional money carriers called Angadias to carry out illegal trades.
Overall, Sebi found 22 companies involved and conducted searches at 20 locations to uncover the full crime. Because of this evidence, Sebi has temporarily banned Parekh and Salgaocar from trading in the Indian stock market and has taken their illegal profits.
This situation highlights how law enforcement is getting better at catching financial scams and shows the importance of careful monitoring of stock market activities.
Leave a Reply