The Securities Appellate Tribunal (SAT) has rejected Ketan Parekh's request to cross-examine two traders in an ongoing front-running probe. This decision relates to a January 2025 SEBI order accusing Parekh of generating ₹65.77 crore in illegal gains. The legal matter is now reserved for final adjudication, with regulators also scrutinizing foreign portfolio investors linked to the case.
The Securities Appellate Tribunal (SAT) has dismissed an appeal filed by Ketan Parekh, in which he sought to cross-examine two traders associated with the Capital Group. The tribunal, led by presiding officer Justice PS Dinesh Kumar, labeled the request as "misconceived" because the case has already been reserved for final adjudication. This ruling marks a procedural step in the high-profile regulatory investigation that began in early 2025.
Background of the SEBI Investigation
In January 2025, the Securities and Exchange Board of India (SEBI) issued an interim order that barred Ketan Parekh and Singapore-based trader Rohit Salgaocar from the securities market. The regulator accused them of front-running trades belonging to a major US-based global foreign portfolio investor (FPI) that manages approximately $2.5 trillion in assets. SEBI alleged that Parekh used a network to front-run these trades, resulting in illegal gains of ₹65.77 crore, which the regulator has ordered to be disgorged.
In its defense of the refusal to allow cross-examination, SEBI noted that the statements from the two traders were not used to draw any adverse conclusions against Parekh. Furthermore, the regulator pointed out that these specific individuals were not even named in the January 2025 interim order.
Expanding Regulatory Probe
The scope of this investigation has grown beyond the initial allegations against Parekh and Salgaocar. In May 2026, SEBI issued show-cause notices to six foreign portfolio investors (FPIs) under the Capital Group umbrella. The regulator is examining potential lapses in these funds' internal controls, specifically regarding the maintenance of trade confidentiality. This indicates that the investigation is now evaluating systemic risks and whether proper checks were in place to prevent the alleged information leaks.
The most important monitorable for investors and market observers is the upcoming final order from SEBI. The outcome of this adjudication will determine the extent of further penalties, potential permanent bans, or additional enforcement actions. The market will also track whether the ongoing probe into the foreign funds leads to stricter regulatory guidelines regarding how large FPIs handle sensitive trade information.