The foreign investor in whose deals Ketan Parekh did front-running trade was the well-known American investment firm Tiger Global. This is confirmed by the data available on the exchange. Stock market regulator SEBI had busted this front-running scam a day earlier on January 2. However, SEBI had taken the name of ‘Tiger Global’ in its interim order. Sebi had said that Ketan Parekh, a well-known market operator of his time, and his Singapore-based colleague Rohit Salgaokar, among others, had carried out front-running trades in deals of a “big clients”. According to data available on the exchange, this front-running trade was in shares of PB Fintech.
Data from stock exchanges showed that Tiger Global and a fund owned by it had sold shares of PB Fintech on November 11, 2022. PB Fintech was mentioned in the SEBI order, but it did not mention the name of the fund or entity in whose trades the alleged wrongdoers were carrying out front-running. Instead, SEBI had addressed the funds as ‘big clients’.
The SEBI investigation revealed that Parekh, Salgaonkar and a group of others were not only carrying out front-running trades, but were also involved on the buy side when shares of PB Fintech were sold to Tiger Global.
‘Front-running’ refers to an illegal activity where the fund manager/dealer/broker obtains non-public information of a major transaction in advance and takes a position based on that to make profits. That is, they earn profit by investing money in the market on the basis of secret information.
SEBI, in its 188-page order, said, “On November 11, 2022, 2 funds of a ‘large client’ sold 52.5 lakh shares in the stock of PB Fintech (Policy Bazaar). It was observed that GRD Securities Limited (FR1), Salasar Stock Broking Limited (FR2) and Anirudh Damani (FR3) have signed their deal with big clients for 20.61 lakh shares. The trade has been matched.”
BSE data showed that two entities, Tiger Global Eight Holdings and another fund owned by it – Internet Fund III Pte Ltd, had sold a total of 1.23 crore shares of PB Fintech on November 11, 2022. While Tiger Global Eight Holdings sold 76.13 lakh shares, Internet Fund III Pte Ltd was the seller of 51.6 lakh equity shares.
Tiger Global also sold more than 32.84 lakh equity shares of PB Fintech on November 11, 2022 on NSE at a price of Rs 388.34. SEBI’s order also includes several screenshots of a group chat in which Parekh is allegedly instructing others to place sell orders in PB Fintech’s shares.
Who is Ketan Parekh?
This happened around the year 2000. At that time a person named Ketan Parekh was dominant in the stock market. Many people also called him the next Harshad Mehta of the stock market. While Harshad Mehta had established his hold on Bombay Stock Exchange, Ketan Parekh had made Kolkata Stock Exchange his base. Whatever share Ketan Parekh would have touched, it would have become a rocket and whichever share he would have sold, the company would have been in bad shape. But later it was revealed that Ketan Parekh colludes with the promoters and does major manipulation of share prices. He defrauded lakhs of investors by using pump and dump scheme and committed scams worth crores. After the matter came to light, Ketan Parekh had to go to jail and SEBI had banned him from the stock market for 14 years.
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