The Securities and Exchange Board of India (SEBI) has uncovered a front-running scam involving former stockbroker Ketan Parekh and several associates, leading to the impounding of approximately ₹65.77 crore in illicit gains.
Source:- bbc news
**Background on Ketan Parekh**
Ketan Parekh is a former stockbroker from Mumbai, who was convicted in 2008 for involvement in the Indian stock market manipulation scam that occurred from late 1998 to 2001. During this period, Parekh artificially rigged prices of certain chosen securities (informally referred to as “K-10” stocks), using large sums of money borrowed from banks including the Madhavpura Mercantile Co-operative Bank, of which he himself was a director.
Source:- bbc news
**Details of the Scam**
SEBI’s investigation revealed that Parekh and his associates engaged in front-running activities, where they executed trades based on non-public information about upcoming client orders. This practice allowed them to profit illicitly by trading ahead of clients’ transactions. The regulator identified multiple entities involved in this scheme, leading to the impounding of the substantial sum mentioned above.
**Regulatory Actions**
In response to these findings, SEBI has taken stringent measures against the implicated entities. The regulator has imposed trading bans and other penalties to deter such fraudulent activities in the future. This action underscores SEBI’s commitment to maintaining market integrity and protecting investor interests.
**Implications for the Financial Community**
This development serves as a stern reminder of the consequences of market manipulation and the importance of adhering to ethical trading practices. Financial institutions and market participants are advised to review their compliance frameworks to prevent involvement in similar fraudulent schemes.
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