Securities and Exchange Board of India (SEBI) has initiated proceedings against 6 foreign portfolio investors associated with Capital Group in connection with an alleged front-running network involving trader Rohit Salgaocar and market operator Ketan Parekh, as per The Economic Times report.
According to a 17-page show cause notice dated February 2, SEBI’s investigation covers the period between January 1, 2021, and June 20, 2023.
The regulator alleged that confidential information relating to large impending trades executed on behalf of Capital Group entities was shared with unauthorised individuals before orders were placed in the market.
The 6 FPIs named in the proceedings are Smallcap World Fund, American Funds Insurance Series Growth-Income Fund, American Funds Fundamental Investors, The Growth Fund of America, AMCAP Fund and Capital Group AMCAP Fund (Lux).
This is the first time Capital Group, which manages more than $3.3 trillion in assets globally, has been directly identified in SEBI’s front-running proceedings after previously being referred to only as a “big client”.
SEBI’s findings identified James Vincent Cheng and Terence Tsai as key individuals in the matter.
According to the regulator, the 2 traders handled nearly 90% of Capital Group’s India-related trading activity and allegedly shared information regarding upcoming buy and sell orders with Rohit Salgaocar before execution.
The regulator alleged that details including stock names, quantities, and trade prices were systematically communicated ahead of large market transactions.
Salgaocar is a director at Strait Crossing Pte Ltd, which SEBI described as an unregistered entity in India.
SEBI stated that Salgaocar subsequently passed on the sensitive trading details to Ketan Parekh and associated traders, enabling them to take market positions before Capital Group’s orders were executed.
“Rohit Salgaocar connived with Ketan Parekh and communicated to him the non-public information with respect to the large order of the 6 FPIs under Capital Group,” SEBI said in the notice.
The regulator further alleged that Parekh used multiple trading accounts to benefit from advance knowledge of the transactions.
SEBI said its findings were supported through examination of Bloomberg chat records and WhatsApp communications.
The regulator’s primary allegation against the Capital Group-linked entities relates to inadequate controls over confidential trade information.
According to SEBI, Cheng and Tsai allegedly maintained an informal communication channel with Salgaocar under the pretext of sourcing liquidity and identifying institutional counterparties for block trades.
The regulator alleged that this arrangement enabled sensitive internal trading information to be leaked outside authorised channels.
SEBI had already barred Salgaocar from the securities market in January 2025 in connection with the same front-running matter.
Ketan Parekh has previously faced allegations linked to stock market manipulation and bank fraud associated with the 2001 market crash and alleged pump-and-dump activities.
Capital Group declined to comment on the matter, while SEBI did not respond to queries.
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The latest SEBI proceedings mark a significant escalation in the front-running investigation, bringing Capital Group-linked FPIs directly into the regulatory spotlight over alleged lapses in handling confidential trading information.
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Published on: May 21, 2026, 11:04 AM IST
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