Angadias, or an informal cash-transfer network that runs outside regulated banking channels, were used to share profits made from a front-running operation led by Ketan Parekh, a Singapore based trader Rohit Salgaocar and others, according to a SEBI order issued on Thursday.
In an interim order dated January 2, the Securities and Exchange Board of India (SEBI) detailed how the transfer of profits was done using angadias.
The order was issued after the regulator investigated an unusual front-running scam, which involved Salgaocar being privy to a big US fund's trades and taking Parekh's helps to find counter parties to the trade. Parekh and a network of his associates would then use this information to front run the fund's trades.
In the last leg of this operation, when profit sharing had to be done, this network used the informal cash-transfer system or angadias.
Also read: Rishte mei hum tumhare baap lagte hain, naam hai SEBI: How the regulator nailed Ketan Parekh
How this network worked
This involved people using currency notes as 'bills' or ID proof, against which the pre-decided payment would be made. Currency notes are often used by the angadia network because they come with unique numbers, which can be used by both parties to identify each other.
In the first leg of such transactions, when the request for the money is made, the details of the note (such as the unique number) are shared. This note is then given to the angadia to be presented to the other party (the cash giver). In the second leg, when the transaction is complete--that is, the payment is made--the photo of the currency note that the angadia carries is sent to the first party (the cash recipient). In the whole transaction, the currency note serves as the ID proof for the angadia.
For example, in this particular operation, an associate of Parekh named Sagar is seen asking another front-runner entity Sumit Sonthalia for Rs 50 lakh, saying that Boss (Parekh) needs the money.
After Sumit confirms that the payment will be done, Sagar sends the details of an Angadia (one of the people who work for this informal network) along with details of a currency note (the unique number). This Angadia would then present himself to Sumit and show the note to collect the payment on behalf of Parekh.
Sumit then clicks a photo of the same note and sends it to Sagar, saying that the payment has been made against the said currency note.
In another transaction given in the order, Shyam Rajkumar Saraogi sends details of an angadia and the photo of a currency note to Sanjay Taparia.
Sanjay Taparia then sends the same details to Kau New, who is an associate of Parekh.
The next day, Sanjay Taparia checks with Kau New if Rs 20 lakhs has been transferred.
Three days later, Kau New responds by saying that the transfer has been done, and sends a picture of a receipt issued by the angadia and the currency note. The receipt carries the name of the person Shyam had asked the money to be transferred to.
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