SEBI's interim order restrains Ketan Parekh, Salgaocar for front-running

What the Record Shows

The Securities and Exchange Board of India passed an ex-parte interim order cum show cause notice dated 2 January 2025 in the matter of extended front running by Rohit Salgaocar, Ketan Parekh and others. It is important to be clear at the outset about what this is: an interim, ex-parte order, meaning it records SEBI's prima facie view and was passed before the persons named had been heard. It is not a final adjudication, and it may be modified or set aside as the proceedings run their course.

The order, passed by Whole Time Member Kamlesh C. Varshney under reference WTM/KV/ISD/ISD-SEC-7/31103/2024-25 and running to 188 pages, restrained all 22 noticees from the securities market and directed the impounding of Rs 65,77,11,547 - about Rs 65.77 crore - of what SEBI described as prima facie unlawful gains, on a joint and several basis, with bank and demat accounts frozen. SEBI grouped the noticees as "information carriers" (Rohit Salgaocar, a Singapore citizen, and Ketan Parekh), "front runners", "facilitators" and connected directors.

SEBI invoked sub-sections 11(1), 11(4), 11(4A) and 11B of the SEBI Act, 1992 read with Regulation 11 of the PFUTP Regulations, 2003. Because the order is prima facie and pre-hearing, everything that follows is SEBI's allegation, not an established finding. Related SEBI enforcement can be followed through Oquilia's enforcement archive.

How It Worked

According to SEBI's order, the arrangement began with a legitimate relationship. SEBI alleges that a Singapore-based intermediary was in regular contact with the dealers of a large US-based foreign portfolio investor - anonymised in the order as the "Big Client" - for the proper purpose of sourcing counterparties for the fund's large block trades. SEBI alleges that this non-public order information was instead passed to Ketan Parekh, who arranged for it to be traded ahead of through a set of broking entities and conduit accounts.

The economics SEBI describes are those of classic front-running: knowing that a very large order is about to hit the market and move a stock, a trader buys just before the institution buys and sells into that buying, capturing the price move the big order itself causes. SEBI alleges this pattern ran for roughly two and a half years and set its investigation period accordingly.

SEBI's order records operational detail it says points to concealment: the use of multiple SIM cards not registered in the users' own names, and communication under code names including "Jack", "Boss", "Bhai" and "Wellwisher". SEBI states the scheme was detected by a new surveillance alert model it had built to catch information-based trading. In the order SEBI also refers to the "repetitive nature of violations by Ketan Parekh" as a factor in deciding to act on an interim basis; that is SEBI's characterisation, and any earlier matter is separate from and not proof of the present allegations. Every description of the trading here is drawn from SEBI's interim order and remains an allegation pending hearing. The mechanism is the same information-misuse pattern SEBI set out in the Axis Mutual Fund front-running order.

Who Lost Money

The party SEBI identifies as directly affected is the foreign portfolio investor whose execution was allegedly degraded when its large orders were traded ahead of. When an institution's buying or selling is anticipated and front-run, the institution gets worse prices on those trades, and that cost flows through to the end investors in the fund. Because the affected client is a large institution rather than a set of named Indian retail investors, the order does not itemise an individual retail loss figure.

The measure of harm in the order is therefore the alleged unlawful gain rather than a tally of victim losses. SEBI put that figure at Rs 65,77,11,547 and impounded it, apportioning liability among Salgaocar, Parekh and the front-running entities on a joint and several basis. Impounding at the interim stage is a protective step: SEBI's stated concern, echoing an earlier Securities Appellate Tribunal observation it cited, is that unless the money is locked down early it could be dissipated and put beyond the reach of any eventual disgorgement direction.

Whether any amount is ultimately disgorged, and how it is applied, depends on the final order that is yet to be passed after the noticees are heard.

Where It Stands Now

As an interim order, this is the beginning of a process, not its conclusion. The same document served as a show cause notice, and the noticees are entitled to reply and to be heard before any final order is passed. The interim restraints and the impounding are the operative position in the meantime.

The matter has since moved to the appellate stage on procedural grounds. Rohit Salgaocar approached the Securities Appellate Tribunal challenging SEBI's denial of cross-examination and other natural-justice points, and the tribunal has been hearing that challenge; reports indicate SAT allowed him to cross-examine Ketan Parekh as part of the process. No final adjudication on the merits has concluded, and no court has recorded any criminal conviction in this matter. Because this is an ex-parte interim order and the noticees had not been heard when it was passed, they are presumed innocent, the allegations remain allegations, and due process continues.

What It Means

For an ordinary investor, a case like this is less about the named individuals than about the plumbing that is supposed to keep large-order information confidential. The alleged weak point was not a hack but a trusted relationship - a broker legitimately sourcing counterparties for a fund's block trades. That is exactly why institutions ring-fence order information and regulators build surveillance that reconstructs who traded just before whom.

The most useful takeaway is what an interim order actually is. SEBI's early impounding here is designed to preserve money, not to prove the case; the proof, if it comes, is in the final order after the noticees are heard. A reader watching enforcement news should resist reading an interim restraint as a verdict, and should note the difference between a prima facie order and a concluded finding. Anyone can check the registration and standing of a market intermediary on SEBI's own portal, which is the practical equivalent of the confidentiality controls institutions rely on internally. This is about understanding process, not predicting how the case ends.

FAQ

Is this a final SEBI order?

No. The order dated 2 January 2025 is an ex-parte interim order cum show cause notice. It records SEBI's prima facie view and was passed before the noticees were heard. They are entitled to reply and to a hearing, after which a final order will be passed. The findings may be confirmed, modified or set aside.

Does SEBI's interim order mean the people named are guilty?

No. An interim order contains allegations, not findings of guilt; the persons named are presumed innocent until proven otherwise, and due process continues. SEBI's characterisations are prima facie and subject to the noticees being heard and to appeal before the Securities Appellate Tribunal.

What exactly did SEBI direct?

Per the order, SEBI restrained all 22 noticees from the securities market, impounded Rs 65,77,11,547 of alleged unlawful gains on a joint and several basis, and froze the relevant bank and demat accounts. It invoked sections 11(1), 11(4), 11(4A) and 11B of the SEBI Act read with Regulation 11 of the PFUTP Regulations.

Who is the "Big Client"?

SEBI deliberately anonymised the foreign portfolio investor as the "Big Client" in its order. The fund is described as the party whose orders were allegedly front-run, not as an accused party, and this report follows SEBI in not identifying it.

Where can I read the official order?

The 188-page order is published on SEBI's website. The direct link is in the source note below.

This report is based on the SEBI ex-parte interim order dated 2 January 2025 in the matter of extended front running by Rohit Salgaocar, Ketan Parekh and others and subsequent appellate proceedings reviewed on 29 July 2026.