SAT rejects Parekh plea on Capital Group traders' cross-examination

Sebi had barred Parekh and Singapore-based trader Rohit Salgaocar in January 2025 for alleged front-running of trades of a US-based foreign portfolio investor

The Securities Appellate Tribunal (SAT) on Monday dismissed an appeal filed by Ketan Parekh challenging the Securities and Exchange Board of India’s (Sebi’s) denial of his requests to cross-examine two traders of Capital Group.

 

The matter pertains to a Sebi interim-order in January 2025, barring Parekh and Singapore-based trader Rohit Salgaocar from the securities market for alleged front-running of trades of a US-based foreign portfolio investor (FPI) which manages around $2.5 trillion worth funds globally.

 

The market regulator had directed disgorgement of ₹65.77 crore of illegal gains made through the alleged scheme.

 

Sebi's previous order was interim and a final order is awaited in the matter. 

 

 

 “In our view, the position of law is clear in that once the matter is reserved, the only right that remains for the appellant is to challenge the final order,” Justice PS Dinesh Kumar, presiding officer of SAT, stated in the oral order.

 

“In the circumstances, the appellant’s request to cross examine the two entities after the matter is reserved after adjudication is mis-consumed, and consequently, the appeal fails,” the tribunal noted.

 

While denying the requests of cross-examination of the two traders by  Parekh, Sebi had stated that the statements of the traders were not used to draw any adverse inference against him as the traders had specifically said that they did not know Parekh. Further, the two traders were also not named in the Sebi’s January 2025 order.  

 

“If according to the appellant, any extraneous material, has been used, which was not put to the appellant during the course of adjudication that may at best be a ground of attack for the appellant to challenge the order that Sebi may pass in the proceedings initiated against the appellant,” state the bench, adding that Parekh had the right to challenge the final order.

 

In this matter, the dealers were in touch with Salgaocar who was in contact with Parekh for the alleged front-running.

 

The market regulator had alleged that Parekh, who was earlier debarred from the stock markets for 14 years for his role in the infamous stock market scam of 2000, orchestrated a new method for front running the trades by staying out of the regulatory ambit.

 

While Salgaocar provided the information on the forthcoming trades of the FPI which he had access to, Parekh built the positions through various associates in Kolkata.