Meet Ketan Parekh, The Harshad Mehta Protege Involved In Rs 40,000 Crore Scam – News18

Harshad Mehta is infamous for orchestrating the largest stock market scandal. Following his scam, another significant financial wrongdoing occurred in 2001, led by Ketan Parekh, who had previously been associated with Harshad Mehta as his protege. Following the Harshad Mehta scandal, the Ketan Parekh scam emerged as the second significant event that rattled the Bombay Stock Exchange. Ketan Parekh, who had learned trading tactics from Harshad Mehta, essentially replicated the same strategies that Mehta had employed a decade or so earlier. Unfortunately, the outcome mirrored what had befallen Harshad Mehta.

Ketan Parekh, a chartered accountant, assumed control of his family’s brokerage business. Similar to Harshad Mehta, during his heyday, Parekh wielded substantial influence in the stock market and frequently engaged with the leaders of major corporations.

He had a profound comprehension of the ‘Pump and Dump’ strategy, employed by Harshad Mehta, but he sought to implement it with a twist. In essence, ‘Pump and Dump’ is a fraudulent scheme in the stock market where a prominent investor initially drives up share prices and subsequently, once the stock reaches its zenith, exits by selling off all the shares.

Ketan Parekh was known for enticing investors with prospects through affordable stocks. Around the early 2000s, Parekh foresaw the rapid expansion of the IT sector in the country, prompting him to invest in IT stocks. To exploit this opportunity, he targeted smaller companies and generated substantial profits through the ‘Pump and Dump’ approach.

Subsequently, Ketan Parekh continued to search for stocks characterised by low market capitalisation and limited liquidity. He would then funnel funds into these shares and engage in insider trading within the companies through his extensive network.

The stock market became aware of Ketan Parekh’s fraudulent activities when the Mumbai branch of the Bank of India accused him of swindling them of Rs 137 crore. This revelation triggered a significant downturn in the stock market. Subsequently, when the Reserve Bank of India (RBI) initiated an investigation into Parekh’s activities, he was found guilty of insider trading. Following this discovery, the Central Bureau of Investigation (CBI) arrested Ketan Parekh.

Ketan Parekh faced charges of manipulating share prices. After a thorough investigation, the market regulator imposed a ban on his participation in the stock market. Simultaneously, the court handed down a prison sentence for his actions. According to media reports, Ketan Parekh was responsible for orchestrating a scam of approximately Rs 40,000 crore through these deceptive tactics.