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{{Use dmy dates|date=June 2018}}
{{Use Indian English|date=June 2018}}
'''Ketan Parekh''' is a former stockbroker from [[Mumbai]], who was convicted in 2008 for involvement in the [[Bombay Stock Exchange|Indian stock market]] [[Financial crimes|manipulation]] scam that occurred from late 1998 to 2001.<ref name="SD2009">{{cite web|last1=Dalal|first1=Sucheta|title=SEBI Discovers Ketan Parekh The tahmid (18 June) 2009)|url=http://suchetadalal.com/?id=8499c6ff-605a-8817-4a3a0f3d5356&base=sections&f&t=SEBI+Discovers+Ketan+Parekh|website=www.suchetadalal.com|publisher=Sucheta Dalal|accessdate=30 January 2018}}</ref> During this period, Parekh artificially rigged prices of certain chosen securities (informally referred to as K-10 stocks), using large sums of money borrowed from banks including the Madhavpura Mercantile Co-operative Bank, of which he himself was a director.<ref name="SD2001">{{cite news|last1=Dalal|first1=Sucheta|title=Ketan Parekh: Delusions of invincibility?|url=http://www.rediff.com/money/2001/mar/31dalal.htm|accessdate=30 January 2018|publisher=Rediff|date=13 March 2001}}</ref> As a result, he was banned from trading in the Indian stock exchanges till 2017.<ref name="sebi1">{{cite web|title=Action against Harshad Mehta, Videocon, BPL and Sterlite (Press release 19 April 2001)|url=https://www.sebi.gov.in/media/press-releases/apr-2001/action-against-harshad-mehta-videocon-bpl-and-sterlite_17608.html|website=www.sebi.gov.in|publisher=SEBI (Securities and exchange board of India)|accessdate=30 January 2018}}</ref>

==Early career==
Parekh, after becoming a [[Chartered accountant|Chartered Accountant]],<ref>{{Cite web|date=December 18, 2009|title=2001-Ketan Parekh scam: Stock and bull story|url=https://www.indiatoday.in/magazine/cover-story/story/20091228-2001-ketan-parekh-scam-stock-and-bull-story-741568-2009-12-18|access-date=2020-10-10|website=India Today|language=en}}</ref> started his career in the late 1980s at Narbheram Harakchand Securities (NH Securities), a reputed institutional brokerage firm. In the 90s, he came in contact with [[Harshad Mehta]], a well known stock broker and subsequently joined Mehta's firm [[GrowMore investments]], a firm that Mehta had set up and which was involved in the 1992 Indian stock market scam.<ref>{{cite web|title=The securities scam of 1992 - CBI Archives|url=http://www.cbi.gov.in/fromarchives/harshadmehta_nw/harshadmehta.php|website=www.cbi.gov.in|publisher=CBI (Central Bureau of Investigation), India|accessdate=22 May 2018}}</ref><ref>{{cite web|url=http://in.reuters.com/article/asiaCompanyAndMarkets/idINBOM3686020080401|title=India court gives Ketan Parekh 1yr prison in 1992 scam|date=1 April 2008|work=[[Reuters]]|accessdate=7 May 2010}}</ref><ref name=hindu2009>{{cite web|url=http://www.hindu.com/thehindu/holnus/006200906042112.htm |title=SEBI finds Ketan Parekh funds in markets, seeks ED probe |date=4 June 2009 |work=[[The Hindu]] |accessdate=7 May 2010 |url-status=dead |archiveurl=https://web.archive.org/web/20110117062553/http://www.hindu.com/thehindu/holnus/006200906042112.htm |archivedate=17 January 2011 }}</ref> Though one of the accused in some of the scams that invested heavily in stocks related to IT, media and communication and propagated them. As cover stories emerged in the financial media of his malpractices related to the stock market, scrutiny shifted to his activities leading to his arrest on 30 March 2001.<ref name="IT2009">{{cite news|title=2001-Ketan Parekh scam: Stock and bull story|url=https://www.indiatoday.in/magazine/cover-story/story/20091228-2001-ketan-parekh-scam-stock-and-bull-story-741568-2009-12-18|accessdate=30 January 2018|newspaper=India Today|date=18 March 2009}}</ref>

==Role in 2001 stock market crash ==
Ketan Parekh purchased large stakes in less known small market capitalization companies, and jacked up their prices through circular trading with other traders, and collusion with these companies and large institutional investors. This resulted in steep hikes in share prices (for example: shares of [[Zee Telefilms|Zee telefilms]] zoomed up from Rs 127 to a price of Rs 10,000.<ref name="et">{{cite news|last1=Chakraborti|first1=Chiranjeevi|title=Remember Ketan Parekh? Some KP10 stocks still doubled investors' wealth|url=https://economictimes.indiatimes.com/markets/stocks/news/remember-ketan-parekh-some-kp10-stocks-still-doubled-investors-wealth/articleshow/53111351.cms|accessdate=11 January 2018|publisher=Economic Times|date=8 July 2016}}</ref> This set of ten stocks was colloquially referred to as "K-10" stocks and Parekh was playfully referred to as "Pentafour".<ref name="IT2009" />

It later transpired that promoters and industrialists often gave Parekh funds to artificially rig up their share prices. Thus in just a few months, scrips of virtually unknown companies like Visualsoft rose from Rs 625 to Rs 8,448 per share and Sonata Software rose from Rs 90 to Rs 2,936.60. However, the bear cartel in Bombay stock exchange started to hammer his K-10 stocks in February 2001, leading them to fall and precipitating a payment crisis in [[Calcutta Stock Exchange|Calcutta]].<ref name="IT2009" /><ref>{{cite book|title=Report - Joint committee on stock market scam and matters relating thereto (as tabled at the thirteenth Lok Sabha)|date=19 December 2002|publisher=Government of India|location=New Delhi|url=http://www.watchoutinvestors.com/JPC_REPORT.PDF|accessdate=24 April 2018}}</ref>

On 1 March 2001, just after the Indian Union Budget had been presented, the [[BSE Sensex]] crashed 176 points, prompting the then NDA government to set up an inquiry into the market reaction. Subsequently the [[Reserve Bank of India|RBI]] refused to clear pay orders (POs) that had been given by Parekh as collateral for loans to BOI (Bank of India), as they found them to be suspicious. The RBI commenced an investigation against Parekh. Around the same time, a bear cartel of brokers in Mumbai opposed to Parekh tried to dump their shares of K-10 stocks. Panicking, Parekh sold off his entire ownership of the so called K-10 stocks that he had successfully jacked up over the past two years, especially those of two entities - GTB bank and MMCB bank. He carried out this large scale dump in the evening, after regular trading hours, from 5 PM to midnight at the [[Calcutta Stock Exchange]]. This resulted in a stock market crash the next day, resulting in large scale losses for large institutional investors, including insurance companies and mutual funds.<ref>{{cite news|title=Ketan Parekh still 'active' in market, ramping up stocks: IB report|url=https://economictimes.indiatimes.com/markets/stocks/policy/ketan-parekh-still-active-in-market-ramping-up-stocks-ib-report/articleshow/7026357.cms|accessdate=11 January 2018|publisher=Economic Times|date=2 December 2010}}</ref>

A 30 member [[Joint Parliamentary Committee]] (JPC) investigation ensued which found that Parekh had been involved in [[circular trading]] throughout the time period from and with a variety of companies, including [[Global Trust Bank (India)|Global Trust Bank]] (GTB) and [[Madhavpura Mercantile Cooperative Bank]] (MMCB).<ref name=mint>{{cite web|title=Sebi settles HFCL share price rigging case with consent order|url=http://www.livemint.com/2010/02/08222457/Sebi-settles-HFCL-share-price.html|publisher=livemint.com|accessdate=27 May 2011|date = 8 February 2010}}</ref> The JPC found him to have played a major role in rigging the prices of a set of ten Indian companies, from 1995 up to 2001.<ref name="JPC">{{cite book|title=JPC Report on the 2001 Indian stock market scam (Ketan Parekh scam) tabled in the 13th Lok Sabha|date=19 December 2002|publisher=Government of India|location=New Delhi|edition=1|url=http://www.prsindia.org/administrator/uploads/general/1292845141_JPC_REPORT%20on%20stock%20market%20scam.pdf.pdf|accessdate=11 January 2018}}</ref>

This resulted in Parekh's first conviction, which carried a one-year sentence, coming as a result of a transaction he conducted involving a unit of [[Canara Bank]] in 1992.<ref name=reuters2008>{{cite web|url=http://in.reuters.com/article/asiaCompanyAndMarkets/idINBOM3686020080401|title=India court gives Ketan Parekh 1yr prison in 1992 scam|date=1 April 2008|work=[[Reuters]]|accessdate=7 May 2010}}</ref>

Though Parekh was subsequently barred from stock trading, the [[Securities and Exchange Board of India]] alleged in 2009 that a variety of companies and other actors were trading on behalf of Parekh. An investigation ensued and 26 entities were banned from trading as a result of that investigation.<ref name=hindu2009/> In March 2014 he was convicted by a special CBI court in [[Bombay]] for cheating and sentenced to two years rigorous imprisonment.<ref>{{cite web |url=http://www.thestatesman.net/news/42472-stock-broker-ketan-parekh-gets-2-yrs-ri.html |title=Stock broker Ketan Parekh gets 2 yrs’ RI |publisher=The Statesman |accessdate=2014-03-04 |url-status=dead |archiveurl=https://archive.today/20140304133704/http://www.thestatesman.net/news/42472-stock-broker-ketan-parekh-gets-2-yrs-ri.html |archivedate=2014-03-04 }}</ref><ref>{{cite web|url=http://www.financialexpress.com/news/stock-broker-ketan-manharlal-parekh-sentenced-to-2-years-ri-by-cbi-court/1230877 |title=Ketan Parekh sentenced to 2 years RI by CBI court |publisher=Financial Express |date=2012-06-12 |accessdate=2014-03-04}}</ref>

==See also==
*[[Rakesh Jhunjhunwala]]

==References==
{{reflist}}

{{DEFAULTSORT:Parekh, Ketan}}
[[Category:Year of birth missing (living people)]]
[[Category:Living people]]
[[Category:Businesspeople from Mumbai]]
[[Category:Indian stock traders]]
[[Category:Indian investors]]

Ketan Parekh - Revision history

imported>GreenC bot at 06:35, 10 July 2021