(Reuters) – India’s markets regulator on Thursday alleged that former stockbroker Ketan Parekh and 21 others made millions of dollars in illegal trade gains by using inside information from an unnamed overseas entity.
The Securities and Exchange Board of India (SEBI) said in an interim order that Parekh, who had previously been banned in 2003 from the securities market for alleged stock manipulation, along with others benefited from using information that was not public relating to trades planned by a “big client” it did not name.
Parekh and 21 other individuals or entities named in SEBI’s ex-parte order have been given 21 days to file their responses. Parekh did not immediately respond to a Reuters email seeking comment.
The SEBI said its investigation was for the period between Jan. 1, 2021 and June 20, 2023. It said it would recover 657.7 million rupees ($7.67 million) of “unlawful gain earned from the alleged violations”, and barred Parekh and two others from dealing in securities for an unspecified period.
Parekh was trading independently at the time and SEBI said he organised the trading scheme in which the 21 other people were also involved.
“Based on the evidence collected during the search and seizure operation, it was prima facie suspected that, in addition to traditional front running, the front runners used complex trading strategies to take advantage of the prior knowledge of the impending trades of the Big Client,” the SEBI order said.
Front running is trading of stocks or such assets based on insider knowledge of a future transaction.
The SEBI in 2003 had barred Parekh and his group companies from the securities market for 14 years over irregularities and manipulations in trades made between 2000 and 2001 during the tech boom.
($1 = 85.7340 Indian rupees)
(Reporting by Sethuraman NR and Nishit Navin in Bengaluru; Editing by Susan Fenton)
