A ring of operators was used in front-running trades of US-based investment firm Tiger Global in shares of PB Fintech, data from stock exchanges has confirmed, which capital market regulator Sebi had referred to as the 'Big Client' in its order against veteran market operator Ketan Parekh, and Singapore-based trader Rohit Salgaocar along with other entities, dated January 2.
Data from stock exchanges showed that it was Tiger Global and a fund owned by the US-based investment firm that had sold shares of PB Fintech on November 11, 2022.
Sebi's order had mentioned PB Fintech, the parent entity of Policy Bazaar, but it has not disclosed the name of the fund or entity whose trades the alleged wrongdoers were front-running. The capital market regulator referred to the fund as the 'Big Client'.
The group of Parekh, Salgaocar and others were not only front-running the trades but was also on the buying side when Tiger Global was sold shares of PB Fintech, revealed Sebi's investigation.
'Front-running' refers to the illegal practice of placing a personal trade based on non-public information about a large upcoming order, that may impact the price of a security. This practice allows the trader to profit by buying or selling before the larger order hits the market and is a form of market manipulation.
"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 188-page long Sebi order said.
Also Read: Ketan Parekh strikes again! SEBI unearths unusual front-running scam, impounds Rs 65.77 crore
Data from BSE showed that two entities, Tiger Global Eight Holdings and Internet Fund III Pte Ltd -- a venture capital fund managed by Tiger Global Management – had sold a total of 1.23 crore shares of PB Fintech, in 2022. While Tiger Global Eight Holdings sold 76.13 lakh shares, Internet Fund III Pte Ltd was the seller of 51.6 lakh equity shares.
Tiger Global sold a little over 32.84 lakh equity shares of PB Fintech on NSE as well, on November 11, 2022 at a price of Rs 388.34.
Sebi's order included screenshots of group chats where Parekh is allegedly giving trading instructions to others with respect to sell orders for shares of PB Fintech.
The order also highlighted the chronology of events wherein Salgaocar, with whom Tiger Global used to consult before placing certain orders, passed information to Parekh who then gave trading instructions in the WhatsApp groups.
Also Read: Rishte mei hum tumhare baap lagte hain, naam hai SEBI: How the regulator nailed Ketan Parekh
"As Rohit Salgaocar received the instructions from trader of the Big Client about selling Policy Bazar that day, the same was communicated to Ketan Parekh, who in turn instructed FR2 (Salasar Stock Broking) to sell shares of Policy Bazar Limited," stated the SEBI order.
"… before market hours, Rohit Salgaocar and trader of the Big Client were discussing about Policy Bazar and trader of the Big Client confirmed to Rohit Salgaocar that they would sell Policy Bazar that day… from 9:00 am to 9:58 am, Ketan Parekh gave multiple instructions to sell scrip of Policy Bazar at various price in the WhatsApp group 'Jack-Saro'," added the order.
"At 11:16 am, FR2 confirmed that the buy order for 5,80,869 shares had been executed on BSE out of which, 5,79,001 trades matched with the Big Client," the SEBI order added.
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