Ketan Parekh Scam

Ketan Parekh, better known as “Bombay Bull,” was a mentee of Harshad Mehta, who was also implicated in another scam that rocked the Indian stock market in 1999-2000. Ketan, California's day job began in the late 1980s running the family business of NH Securities, a brokerage firm founded by his father.

In this way, he was able to gain a thorough understanding of stock market trends and investor mindsets. Ketan Parekh age is 60 years and was born in the year 1963.

In his heyday, marketers literally followed his every move blindly, as he used stock prices to gain investor confidence. Not only that, but he enjoys close relationships with many Bollywood celebrities, political parties and business executives, which helped him connect with leading Australian media entrepreneur Kelly Packer. Kerry and Ketan teamed up to launch a $250 million venture capital firm, KPV Venture.

How Ketan Parekh Scam was Executed

Ketan Parekh was a strong believer in the ICE sector (information, communications and entertainment). It was he 1999 to he 2000 when the dotcom boom was just beginning. This allowed him to prove his predictions to many other investors. Ketan Parekh scam amount was roughly around 40,000 crores.

Moreover, since Ketan Parekh ruled the stock exchange from his 1999 to his 2000s, many investment firms, foreign companies, banks and listed businessmen have funded him to be managed.

Ketan Parekh used Kolkata Stock Exchange for trading. This was because it was a stock exchange without strict and centralized rules and regulations. He abused this exchange, connecting with many other brokers to trade on his behalf and giving them a commission. With these huge sums of money, he bought 20-30% stakes in some lesser-known companies, and suddenly the stock prices of such companies skyrocketed and suddenly became the talk of the town. When the price hits a certain level, it quietly exits and sells the security, making countless profits.

Not only did he manipulate stock prices, he played games with banks to make money, cheat stock prices, and control the market. He initially purchased shares in Madhavpura Mercantile Commercial Bank to gain the trust of the bank and approached the loan in the form of a money order.

A money order is a vehicle similar to a check, but issued by a bank after a small advance payment has been made by the customer. When he successfully defrauded the price of MMCB shares, he approached other financial institutions like UTI, promising exchanges, including investments in HFCL. His loan amounted to his Rs 750 crore.

He had created a portfolio called his K-10 consisting of the top 10 hit picks by Ketan Parekh himself. These include Aftek Infosys, Zee Telefilms, Pentamedia Graphics, Mukta Arts and others. He was interested in nondescript companies with small market caps and liquidity. This allowed him to manipulate the prices of such companies using the "pump and dump" method.

It was also reported that he deliberately influenced the share price of certain companies for insider trading, bribed him, and exploited price increases to prey on investors' minds.

Closing Thoughts

In this article, we have discussed how Ketan Parekh's fraudulent conduct affects investor decision-making. Ketan Parekh as well as stock exchanges and investors have bluffed with banks. And all that accumulated into a huge amount of debt that, one day in 2001, made history as the biggest fraud on the Indian stock market.

We are still investigating how many other companies have continued to do business with him after he and others were banned.