The ketan parekh scam the crash

Early career[ edit ] Parekh started his career in the late s at Narbheram Harakchand Securities NH Securitiesa reputed institutional brokerage firm.

The ketan parekh scam the crash

According to a report [1] 12 lakh shares of Global in July would have cost KP around Rs million. Analysts claimed that KP borrowed from various companies and banks for this purpose. His financing methods were fairly simple.

The ketan parekh scam the crash

He bought shares when they were trading at low prices and saw the prices go up in the bull market while continuously trading. When the price was high enough, he pledged the shares with banks as collateral for funds.

He also borrowed from companies like HFCL. This could not have been possible out without the involvement of banks. The pay orders were discounted at BoI.

It was alleged that MMCB issued funds to KP without proper collateral security and even crossed its capital market exposure limits. KP used around 16 such accounts, either directly or through other broker firms, to obtain funds.

The Crash that Shook the Nation

Apart from direct borrowings by KP-owned finance companies, a few brokers were also believed to have taken loans on his behalf. KP reportedly used his BoI accounts to discount pay orders worth about Rs 24 billion between January and March The MMCB pay order issue hit several public sector banks very hard.

Ketan Parekh popularly called KP, was originally a Chartered Accountant by profession and used to manage a family business. He bought shares trading at low prices and when the prices went up in the bull market he pledged the shares with banks as collateral for funds and used the funds to buy more shares. - A small investor hit by the Ketan Parekh scam, in April THE CRASH THAT SHOOK THE NATION The point[1] Sensex[2] crash on March 1, came as a major shock for the Government of The crash, which was led by a fall in the NASDAQ, saw the K stocks also declining. - A small investor hit by the Ketan Parekh scam, in April The Crash that Shook the Nation The point 1 Sensex 2 crash on March 1, came as a major shock for the Government of India, the stock markets and the investors alike.

KP was asked to either pledge more shares as collateral or return some of the borrowed money. In either case, it put pressure on his financials.

By Aprilmutual funds substantially reduced their exposure in the K stocks. However, with improvements in the global technology stock markets, the K stocks began picking up again in May Aftek Infosys was also trading at above Rs Led by doubts regarding the future of technology stocks, prices started falling across the globe and mutual funds and brokers began selling them.

One, the lack of regulations and surveillance on the bourse allowed a highly illegal and volatile badla business Refer Exhibit III.

THE FACTORS THAT HELPED THE MAN

KP used to cover any losses that occurred due to price shortfall of the scrips and paid a 2. Also, while the earlier loans to KP were against proper collateral and with adequate documentation, it was alleged that this time KP was allowed to borrow without any security.

By now, SEBI was implementing several measures to control the damage. To revive the markets, SEBI imposed restriction on short sales[4] and ordered that the sale of shares had to be followed by deliveries.

SEBI also banned trading by all stock exchange presidents, vice-presidents and treasurers. A historical decision to ban the badla system in the country was taken, effective from Julyand a rolling settlement system for Group Ashares[5] was introduced on the BSE.

Usually the speculator promises to deliver the shares in future anticipating a fall in prices. If the price falls, he buys the shares at the lower rate, and makes a profit on the difference.

The ketan parekh scam the crash

If prices rise, he buys the shares at the higher price, and sustains a loss. These companies have the best fundamentals and growth prospects. The trading interest in these shares is high and certain exchanges also offer the carry-forward facility, which enables speculative trading of these shares.

Because of the high trading volumes, the spreads are low and it is possible to easily enter and exit from these shares.- A small investor hit by the Ketan Parekh scam, in April THE CRASH THAT SHOOK THE NATION The point[1] Sensex[2] crash on March 1, came as a major shock for the Government of The crash, which was led by a fall in the NASDAQ, saw the K stocks also declining.

Ketan Parekh Scam and it’s Impact on Financial Institutions Ketan Parekh was threatening to sue the Bank of India for defamation, because it complained about the bouncing of Rs billion pay orders issued to the broker by the Madhavpura Mercantile Cooperative Bank.

Ketan Parekh popularly called KP, was originally a Chartered Accountant by profession and used to manage a family business. He bought shares trading at low prices and when the prices went up in the bull market he pledged the shares with banks as collateral for funds and used the funds to buy more shares.

Ketan Parekh can best be described as the Pied Piper of Dalal Street. For two years, marketmen followed his every action because all he touched turned to gold. Better known as the Pentafour Bull, he kept a low profile, except when he threw a millennium bash that was .

Ketan Parekh is a former stock broker from Mumbai, India, who was convicted in , for involvement in the Indian stock market manipulation scam that occurred from late to The Ketan Parekh Scam The Crash that Shook the Nation The point1 Sensex2 crash on March 1, came as a major shock for the Government of India, the stock markets and the investors alike.

Ketan Parekh scam: Stock and bull story - Cover Story News