SAT Rejects Salasar Stock Broking’s Appeal in Ketan Parekh Front-Running Case
SAT ruled that Salasar Stock Broking must comply with SEBI’s directive to deposit Rs 12.45 crore, citing WhatsApp messages and financial records as evidence.
The appellate authority of the market regulator, the Securities Appellate Tribunal, has dismissed an appeal filed by Salasar Stock Broking in the high-profile front-running case that involved Ketan Parekh, businessman Rohit Salgaocar, and several others.
The stockbroking firm had approached SAT to deposit only half of its alleged profits in the front-running scam. The tribunal mentioned that the appeal had no merit, as the WhatsApp messages and financial records used in the SEBI investigation clearly implicate the accused in the case.
SEBI had previously directed the firm to deposit alleged profits worth Rs.12.45 crore in an interest-bearing account, jointly Parekh, Salgaokar, and four others.
SAT further observed in its order that given Ketan Parekh’s past involvement in securities fraud and the strong evidence against the appellants, full deposit must be made as directed by SEBI.
It clarified that this was a preliminary order and would not influence SEBI’s final adjudication of the case.
Background
Markets regulator Securities and Exchange Board of India, on Jan 2, imposed a liability of Rs. 65.7 crore on Ketan Parekh, Rohit Salgaokar, and others in the extended front running case. The regulator gave these directions in an interim order.
SEBI observed in its order that Parekh has violated security law provisions several times, and hence it is pertinent to fix a liability for the entire scheme on the parties responsible. The regulator has said that Parekh and Salgaocar devised the scheme.
Ketan Parekh was the famous stock market operator who was earlier imprisoned and was debarred from stock markets for 14 years for his role in the infamous stock market scam of 2000.
The regulator has come out with a 188-page interim order that has made observations against 22 entities in total.
After the investigation that started in the year 2021, SEBI found that Salgaocar, who is a Singapore citizen, had some connections with a US-based fund house through which he knew about the trades that were to be taken up by it.
Using this information, he used it to find counterparties for the fund house's trades through Indian funds, foreign funds, and other holders of shares. It is important to note that most of this was done by Ketan Parekh using his extensive network, reaching up to 90 percent of the trades being fulfilled by him.
As per the SEBI order, Parekh used to work in a systematic manner once he got the information from Salgaocar and executed trades from several accounts, causing illegal gains.
