A special Central Bureau of Investigation (CBI) court in Mumbai has convicted former stock broker Ketan Parekh in one of India’s biggest stock market scams dating back to 1999-2001. Parekh, a chartered accountant by training, has been imposed a fine of Rs 50,000 and imprisonment of two years in the case filed by Madhavpura Mercantile Co-operative Bank in 2001.
He was accused of inflating share prices of the firms like Zee Telefilms, Ranbaxy, Global Telesystems, Himachal Futuristic Communication (HFCL), Silverline, Satyam Computers, SSI, among others, using circular trading.
To finance these transactions, Parekh and his associate companies borrowed from Madhavpura Mercantile Co-operative Bank and Global Trust Bank (GTB). This led to collapse of Madhavpura Mercantile Co-operative Bank causing losses to thousands of its depositors and other banks. On the other side, GTB was merged with Oriental Bank of Commerce, which is now fighting the cases in the court.
The scam came into light in 2001 after value of the rigged shares crashed.
Following an investigation by the capital markets regulator Securities and Exchange Board of India (SEBI) along with other investigating agencies, it was found that Parekh used the bank and promoter funds to rig the markets. He was taken in custody in March that year initially for 53 days.
After this, SEBI banned Parekh and associate firms in 2003 from trading in the market for 14 years for having rigged the market by wrongful means.
(Edited by Joby Puthuparampil Johnson)