10-08-2013, 02:31 PM
Ketan Parekh Scam
Ketan Parekh .ppt (Size: 3 MB / Downloads: 29)
Mechanism of SCAM
Ketan Parekh, a qualified CA, and a stock broker, identified a number of stocks (popularly called the K10), and took up huge positions in these.
He used a large number of Benami accounts and smaller stock exchanges, such as the Kolkata and Ahmedabad stocks
He borrowed heavily from banks such as Global trust Bank and Madhavpura Mercantile Cooperative Bank.
When the price was high enough, he pledged the shares with banks as collateral for funds.
It was alleged that MMCB issued funds to KP without proper collateral security and even crossed its capital market exposure limits
As per a RBI inspection report, MMCB’s loans to stock markets were around Rs. 10 billion of which over Rs. 8 billion were lend to KP and his firms
KP reportedly used his BOI accounts to discount 248 pay orders worth about Rs. 24 billion between January and March 2001
BOI’s losses eventually amounted to well above Rs. 1.2 billion
The MMCB pay order issue hit several public sector banks very hard
K 10 Stocks
Aftek Infosys
DSQ Software
Global Telesystems
Himachal Futuristic Communications
Pentamedia Graphics
Satyam Computers
Silverline Technologies
SSI
Zee Telefilms
Pritish Nandy Communications
The effect of the Ketan Parekh scam on the stock markets:
The Bombay Stock Exchange (BSE) President Anand Rathi's (Rathi) resignation added to the downfall. Rathi had to resign.
By the end of March 2001, at least eight people were reported to have committed suicide.
Hundreds of investors were driven to the brink of bankruptcy.
A change of Re. 1 in the price of a share when one speaks of a share rising or falling by so many points