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Wednesday 29 March 2017
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Stockbroker Ketan Parekh gets 2-yr RI for embezzlement

Mumbai, March 3, 2014, DHNS:

Court acquits other three public servants charged by CBI

A special court dealing with Central Bureau of Investigation (CBI) cases in Mumbai on Monday convicted high-profile former stock broker Ketan Parekh to two years rigourous imprisonment for embezzlement. DH File Photo
A special court dealing with Central Bureau of Investigation (CBI) cases in Mumbai on Monday convicted high-profile former stock broker Ketan Parekh to two years rigourous imprisonment for embezzlement.

In an official communique, the investigating agency stated that the trial court apart from awarding imprisonment has slapped a fine of Rs 50,000 for cheating Bank of Baroda.

The court, however, acquitted the other three public servants who were also charged by the investigating agency for colluding with the share broker between 1989-1991.

As per the case registered by CBI against Bank of Baroda’s then senior manager of NRI Cell and Incharge of Safe Custody Department along with others including Parekh swindled the bank through fraudulent trading schemes.

The modus operandi was simple: the accused obtained duplicate debentures in lieu of originals and pledged the original debentures of a leading private company in the nameof two NRIs which they

claimed were lost from Safe Custody Department of Bank of Baroda, Mumbai Main office; thereafter they availed loans in the name of four associate firms of Ketan Manharlal Parekh.

In 2000, a charge sheet was filed by the CBI and in 2001 another case was registered against Parekh involving the swindling of Madhavpura Mercantile Co-operative Bank.

A big catch

After Harshad Mehta’s stock market scam, Parekh’s case was considered as one of the biggest shares rigging scam that shook the stock market between 1999-2001.

Ironically, Parekh had used the same modus operandi that was employed by Harshad Mehta who had also rigged the share prices through circular trading wherein sell orders are entered by a broker with full knowledge that these trade-offs do not represent any change in the beneficial ownership of the security.

Parekh and his associates had borrowed from Global Trust Bank (GTB) and Madhavpura Mercantile Co-operative Bank to finance these transactions. While GTB was merged with Oriental Bank of Commerce, Madhavpura went bust.

In December 2003, the Securities and Exchange Board of India (Sebi) bannedParekh and associate firms from trading in the market for 14 years; the bull operator then approached the Supreme Court in 2005 to prevent the cancellation of the bail granted to him in 2001 after his arrest.
Granting him bail, the apex court set a timeline for the payment of three instalments, totalling Rs396.63 crore that he owed to various banks.

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