It is how our world works where one does a hundred things right, and no one notices but one wrong action, and you become the talk of the town for years to come. One such person who faced the above scenario is Ketan Parekh, one of the wonders who understood the stock market like no other.
Ketan Parekh, a Chartered Accountant by qualification, inherited the Narbheram Harakchand Securities (NH Securities) institutional brokerage firm from his father. He was a trainee at GrowMore, Harshad Mehta’s startup. He was a suspect in several scams in which Growmore was engaged, although he was never proven guilty. Most people know Ketan Parekh, but not everyone knows the real person behind this name and his honest story in his own words.
So How did Ketan Parekh’s Story Begin?
Ketan Parekh’s journey started in the early 1980s when after completing his education, he started garnering his professional experience by assisting his father & uncles at their family-run firm. At the same time, he also started preparing for his CA and became a certified “Chartered Accountant” in 1985.
With a photographic memory and being someone who liked numbers & figures, along with an interest in how the financial sector works, Ketan soon mastered the art of trading. While Ketan did not initially start his career in the field of trading, but very soon realized that he has got a knack for it.
Who Was Ketan Parekh’s Role Model?
Ketan’s Father Was his Role Model While Growing Up. With his father as his role model, Ketan experienced the world of trading. Ketan’s father was among the best “Jobbers” of the time, and this inculcated the urge to do the best in whichever field you work in. However, Ketan was a risk taker, unlike his father, and liked to indulge in newer ventures. One such venture was investing in software companies that started booming in the late 1990s and early 2000s. Ketan carved a niche for himself with a calculative approach, market research, and thorough understanding. He had put a considerable amount of time into studying companies, their plans, and their potential in these companies.
The Scam of Madhavpura
There would hardly be anyone from the 1990s who wouldn’t have heard about this infamous bank and its scam.
Ketan Parekh, the known “Big Bull” of the stock market, allegedly got a loan of quite a heavy sum from the Madhavpura bank and could not return the money in due time. The bank had to close down as it could not recover the money it gave to its borrowers, and as per the legal proceedings, Supreme Court (in 2007) ordered Ketan Parekh to pay the money he owed to the bank in the form of monthly installments of 26 crores. The recognized part of this scam’s story ends here because what happened afterward and if Ketan was able to repay the money is the truth that is only known to some people.
The Truth Behind The Madhavpura Scam
Here comes the lesser-known truth:
Following the court orders and being a law-abiding citizen, Ketan Parekh returned a whopping amount and fulfilled his obligations as set by the Supreme Court. Sadly, no one was interested in knowing this; it remained a lesser-known fact for years. Ketan went behind bars and worked relentlessly for years to return the money he owed. He is still working on these corrective measures and is doing what’s right.
When Ketan Parekh was convicted for borrowing a huge sum of money from the bank, he had many choices at the time. It was easy to elope with a huge amount of money and settle somewhere in the world where life could have been easier. There could have been less judgment, and Ketan could have lived a stress-free life. However, the choices he made certainly put him in a difficult position. He had to face a sentence and spent a significant amount of time behind bars.
What was disheartening for him was that after following all the legal orders given to him by the country’s judicial system, he was still being judged for making a menace. One of the facts missed here is that the judicial system is in place to ensure that when someone makes a mistake, they are given an apt punishment for it and are asked to work on the corrective measures to reverse the damage they caused. However, when people do that, their name is still only associated with the scam and not with their corrective deeds.
What is the Ketan Parekh Scam?
Ketan Parekh was a firm believer in the ICE industry during the dot-com boom years of 1999 and 2000. (Information, Communication, and Entertainment). This enabled him to show many more investors that his estimates were accurate. Furthermore, various investment firms, foreign corporations, banks, and entrepreneurs from publicly traded companies entrusted him with their money while Ketan Parekh commanded the stock market from 1999-2000. Because there were no rigid and basic rules and regulations, Ketan Parekh traded on the Kolkata stock exchange. He took advantage of such an exchange and also hired numerous additional brokers to trade on his behalf and pay the commission.
With these large quantities of money, he would buy a 20-30% stake in some lesser-known companies, causing their share prices to skyrocket and make them the talk of the town overnight. He would silently leave and sell the shares once the price hit a specified level, reaping huge profits.
Not only did he manipulate stock prices, but he also performed bank games to obtain funds to fool share prices and dominate the market. He began by acquiring Madhavpura Mercantile Commercial Bank shares to gain the bank’s trust when he sought a loan in the form of Pay Orders. He pursued other financial institutions, such as UTI, to guarantee pay orders, which included their investments in HFCL, after successfully ripping off the price of MMCB’s shares. His loan was worth Rs. 750 million.
He created the K-10 portfolio, which includes Ketan Parekh’s top ten hit picks. Among them were Aftek Infosys, Zee Telefilms, Pentamedia Graphics, Mukta Arts, and others. He was seeking low-profile enterprises with low market capitalizations and liquidity. That is how he affected the pricing of such businesses using the ‘Pump and Dump’ strategy. He was also accused of participating in insider trading by purposefully influencing the stock price of certain corporations that would bribe him and then profit from the price rise to deceive investors.
Ketan Parekh Scam Allegations and Unravelling
The SEBI and RBI began looking into this matter following a massive market drop of 176 points in a single day in 2001, only one day after the budget was announced. Ketan Parekh was found guilty of a felony for defrauding the Indian stock market and was forbidden from trading on the Bombay Stock Exchange (BSE) for 15 years till 2017. He was also discovered to be involved in Circular Trading with many banks and Insider Trading, for which he was punished with one year in jail.
However, SEBI conducted an investigation and discovered that, although prohibited from trading, he exploited his network effectively and had some entities trade on his behalf. Later that year, SEBI tracked down several of these businesses and prohibited them from trading. In April 2001, the SEBI revealed that he owed Rs. 12.73 billion to significant corporations, Rs. 8.88 billion to MMCB, and Rs. 2.66 billion to Global Trust Bank.
In 2006, the sum was believed to have reached the startling figure of Rs. 400 billion. He was also accused of using Overseas Business Bodies and Foreign Institutional Investor sub-accounts to receive shares from various corporate organizations to shift money out of the country.
To summarise the allegations against Ketan Parekh, he was involved in bank fraud by misrepresenting facts, falsifying accounts, ripping off stock market prices and exploiting investors’ decisions, mishandling public money, and bribing company directors to enable him to engage in insider trading.
The second half of the real story of Ketan
It began after he was convicted in 2001 when he could have shown non-cooperation or could have fled. Instead, he faced all the charges pressed against him, patiently followed the court orders, accepted & completed his sentences, and returned the money he owed.
Ketan, being a law-abiding citizen, did what was expected from the Indian citizens. His respect for the country’s judicial system is often showcased by his following court orders. Undoubtedly, he has been doing everything needed to correct the wrongdoings. He has been a part of all his court trials and has followed all orders given to him. He has returned a significant chunk of the money he owed to Madhavpura bank.
Ketan’s reputation has taken numerous knocks, yet few know his true path.
While many know him as a convicted investor involved in several frauds, only a few close ones know how he has repaid most of the borrowed funds. At the same time, a few transactions are still being reviewed and concluded. Over the years, he has worked hard to do just the right thing. Ketan has never stepped forward to clarify his side of the tale, which has resulted in several erroneous comments and assumptions. But it is high time that the rest of the world should see the TRUTH and got to understand him as a person, trader, and investor.
Time to Change Preconceptions towards Ketan Parekh
People haven’t bothered to look into the claims or Ketan’s incarceration; instead always connected with a bad image. Ketan should unquestionably be given another chance to clear his name and tell the world what he has gone through, how he has survived it all, and, most importantly, what he has done thus far (especially concerning the court cases filed against him). Everyone must comprehend how Ketan followed the rules and came out clean. Worse has happened in India, with people escaping with enormous quantities of money that belonged to the country. On the other hand, Ketan paid off all of his obligations and faced legal consequences, which he accepted.
His integrity and adherence to the law must be emphasized. He has been meticulously following court judgments and working to correct any flaws in the Indian legal system. Ketan, being patriotic, decided long ago that rather than fleeing the nation, he would confront all the charges against him. He has been fighting to make things right for over two decades.
However, he is still misunderstood, and any accusations against him even 20 years ago are still connected with his name. Everyone deserves a second opportunity, especially if they have attempted to make things right and followed the laws. Ketan feels he has acted correctly thus far and that whatever risks he made during his trading days cost him dearly.
He not only repaid the borrowed amount but also ensured that he stayed in the nation and obeyed the court’s directions. Ketan has fearlessly handled all of his claims and tolerated all of the lawsuits made against him.
If we look at the entire life story, it is pretty clear that Ketan Parekh has been known for his scam for more than 20 years, but hardly anyone knows about what happened after the scam and what Ketan has done post his conviction. Only a handful of people are aware of how he led his life after 2001. His truthfulness and law-abiding nature need to be brought forward.
About the Second Chances
Ketan believes that to date, he has done the right thing, and whichever risks he took during his trading days, he has suffered for them. Not only did he return all the borrowed money, but he also ensured that he stayed in the country and followed the judicial system’s orders. Ketan has faced all his allegations bravely and has been attending to all the cases that were filed against him with great patience.
He has been strictly following the court orders and trying to correct the things that were wrong as per the Indian Judicial system. Being patriotic, Ketan took a long time back that instead of fleeing the country, he would face all the charges against him and has been continuously working on making things right for almost two decades. However, he is misunderstood to date, and any allegations made against him even 20 years back are still attached to his name. People haven’t even bothered to verify the allegations and what correctional work Ketan has done. Instead, still, associate him with a maligned image.
Everyone deserves a second chance, and more so, the person who has tried to make things right and has followed all the orders given to him by the law. Ketan should, certainly, get a second chance to clear up his name and tell the world what he has gone through, how he managed to survive all that, and above all, what he has done so far (especially concerning the court cases that were filed against him).
This is very important that everyone should know how Ketan has followed the law and has come out clean. India has seen worse, especially with people who have fled the country after taking loads of money that belonged to the country. On the flip side, Ketan returned all the money he owned and faced legal punishments, which he accepted. His truthfulness and law-abiding nature need to be brought forward.
Ketan Parekh’s Thoughts About the Current Trading Situation
Ketan has seen the entire trading business and old-school practices undergoing a complete paradigm shift in the last few decades. According to Ketan, the way trading was done 25-30 years ago has significantly changed. There are much safer options now for the people, and one doesn’t need to take a concentrated position in stocks today to make profits. Options like SIPs, mutual funds, etc., are easily accessible to the general public and pose good investment opportunities. Ketan has studied the stock market thoroughly, and many people can benefit from his insights.
People understand finances and trading more today than three decades ago, and one of the biggest proofs of this is the significant increase in the number of Demat accounts in the past 2.5 to 3 years. Before Covid, that is, up till 2020, there was only four crore Demat accounts in India, but as per recent statistics, this number has gone exceptionally high, and at present, there are over 9.5 crore accounts.
Conclusion
Ketan has seen the entire trading business and old-school practices undergoing a complete paradigm shift in the last few decades. He is an expert who should be looked up to understand the flaws of the trading mechanisms, which still exist even today when the Demat accounts crossed the ten crore mark in August 2022.
To summarise, when a name is associated with fraud, right or wrong, it is glamorized and made the talk of the town. But it is dismissed when the same person tries to atone for his faults. As a culture, we must shift our perspective and see the TRUTH.
Also Read:
The Truth you need to know about the Ketan Parekh Scam
