The Ketan Parekh Scam 2001
Former stockbroker Ketan Parekh was found guilty by the Securities Exchange Board of India, the market regulator known as SEBI, of market manipulation and influence peddling, or insider trading. He was identified as one of the main offenders in the Sensex’s 176-point decline, which led to the 2001 Budget’s failure. He fraudulently rigs the values of hand-selected equities known as K-10 stocks by securing loans from financial institutions. Additionally, he was found guilty of the Cantina mutual fund scandal involving more than Rs 47 crore of fraud. The Serious Frauds Investigation Office (SFIO) put the value of Ketan Parekh’s fraud at around 40,000 crores.
We know this from the various media reports, but is this the only truth? Let’s find out the real story behind the man and the scam.
Who is Ketan Parekh?
In the 1980s, Ketan began his career assisting his father and uncles at Narbheram Harakchand Securities, a brokerage firm established by his grandfather in pre-Independence India. Simultaneously, he prepared for the Chartered Accountant qualifications and became a certified CA in 1985. He has two daughters together with his wife, Mamta Parekh.
Ketan Parekh is a protégé of Harshad Mehta, who was famous for his life trajectory. However, if reports are to be believed, Mr. Parekh was nothing like Mr. Mehtain in terms of behavior. He was a quiet, unassuming man who appeared to be an everyday person on the street. In actuality, though, his colleagues and rivals perceive him as being extraordinarily cunning and brutal.
Why did people believe in him?
The Pied Piper of Dalal Street is the finest way to characterize Ketan Parekh. Marketmen followed his every move because everything he touched turned to gold. He was more popularly known as the Pentafour Bull. He kept a quiet profile, save for when he hosted a party to celebrate that was frequented by politicians, business leaders, and celebrities. By starting his trading network, Parekh, a chartered accountant by profession, benefited from his family’s background as a broker. The Indian stock market sprung between 1999 and 2000 as the technological bubble engulfed the world. The Puppet Master of Dalal Street is the finest way to define Ketan Parekh. This instilled in the people hope for better monetary growth, and they started to believe in his market decisions immensely.
How did the Ketan Parekh Scam help in the modernization of the market?
India Today reported in one of its articles on Parekh that the market collapse ultimately pushed for urgent modernization. It is also interesting to note that a seasoned trader who had completed a few transactions for Ketan Parekh (abbreviated KP in stock market circles), as he was and is still known, stated that Ketan Parekh improved the system through more difficult times if Harshad Mehta saw himself as an expert who developed a system and entered the market.
This gave the much-needed fillip to close the loopholes and make laws more stringent, along with more foolproof procedures to avoid such manipulation by stock brokers and traders.
Is Parekh a hero or a villain?
Without back support, it is difficult to compete with and eclipse leading stock market participants. Even if people and the media refer to it as fraud, stock exchange trading is still conducted in today’s generation according to standard practices. How can someone be referred to as a scammer when there are loopholes in the system itself? He was surrounded by a large group of people who were discreetly funding Parekh and lending him assistance. Politicians, businesspeople, conglomerates, and institutional investors all made money during that time and called him a hero. But only Parekh was the target when the story surfaced and he became a villain overnight.
If he were a genuine con artist, he might have gone from India to London like the so-called “genuine con artists,” including Nirav Modi, Lalit Modi, and Vijay Mallya, who defrauded individuals and fled to London, where all con artists and criminals from throughout the world are welcome to live happily and permanently, as India and the UK still do not have an extradition treaty to deport criminals from the UK to India.
Anyone who works in the stock market or with stock brokers will tell you that Parekh’s method of alleged manipulation is just one of the standard trading tactics that brokers employ, even today. He did commit scams, but his pitiful rivals, who had been clamoring for their monopoly for many years, pushed him to leave the market. If common sense and logic are to be followed, short selling is also a scam. We acquire shares when we desire them. How can anyone short-sell their way to riches and make money without spending a dime? Just a few real con artists excessively targeted him and called him a villain.
Conclusion
Today, Ketan has repaid a large proportion of the money owed — and he continues to work towards repaying the remainder, with a few transactions still in the process of being processed and finalized. However, he remains misunderstood by the world. Ketan is still remembered for the allegations made against him 20 years ago but people rarely try to verify the truth behind the allegations and therefore never discover the steps he has taken to correct the wrongs. Ketan’s life has been unlike anything known by the public, full of terrific ups and devastating lows. Today, Ketan would like to tell the world what he has gone through, how he managed to survive, and, above all, what he has done so far to make amends.
