US-based Capital Group's funds were front-run by Ketan Parekh, Rohit Salgaocar and associates, said sources close to the development.
In an interim order issued on January 2, the Securities and Exchange Board of India (SEBI) impounded close to Rs 66 crore of gains believed to have been made by front-running trades of a big client.
In the order, the regulator had no identified the institution whose trades were front run but merely referred to the entity as Big Client.
There was much speculation that the big client in question was Tiger Global. This supposition was made based on the trades taken in PB Fintech's stock on November 11, 2022.
Also read: Rishte mei hum tumhare baap lagte hain, naam hai SEBI: How the regulator nailed Ketan Parekh
"On November 11, 2022, 2 funds of the Big Client sold 52.5 lakh shares in the scrip PB Fintech (Policy Bazaar). It was seen that GRD Securities Limited (FR1), Salasar Stock Broking Limited (FR2) and Anirudh Damani (FR3) have matched their trades with the Big Client for 20.61 lakh shares," the SEBI order said. Data from the exchanges showed that two entities connected to Tiger Global had sold a total of 1.23 crore shares of PB Fintech, in 2022. Also, that Tiger Global sold over 32.84 lakh shares of PB Fintech on NSE as well, on November 11, 2022.
But, sources close to the development, told Moneycontrol that the big client was not Tiger Global but were funds under Capital Group.
Founded in 1931, the Capital Group manages assets worth over $2.7 trillion, according to the company's website.
Moneycontrol has written to Capital Group and the article will be updated when the company responds.
The SEBI investigation revealed that Salgaoncar, a Singapore-based trader, was well connected trader who was helping the big client--a fund house under Capital Group--find buyers/sellers for their trades. Salgaoncar was not an employee of the fund house. He then passed on the information of the trades the fund house was taking to Ketan Parekh, who used his network of associates largely based in Kolkata to front-run the trades.
In the order, SEBI also uncovered how the profits were shared through cash and banking transactions and involved the use of angadias, an informal cash-transfer and banking network.
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