If you've watched Scam 1992 Web Series by Sony Liv, you already know who was Harshad Mehta and what he did and all that- not gonna bore you with that same story. The person that I'm addressing changed the stock market to a far greater extent than Harshad Mehta, when stats are something you care about a lot!
The person I’m addressing here is- Ketan Parekh(Note that you can click on the Wikipedia links for more info that I’ll provide throughout this blog).
Who Was Is Ketan Parekh?
Ketan Parekh is an Indian Stock Broker(now banned), joined Harshad Mehta’s Firm Grow More Research and Consultancy Services as a trainee of Harshad Mehta back in 1990, he was also involved in the 1992 Harshad Mehta scam but was not caught in involvement in the same, though he was caught in another scam named Canfina Mutual Fund. He was CA by profession and came from a stockbroking family background.
Harshad Mehta Scam Vs Ketan Parekh Scam In Terms Of Magnitude
What was the size of Harshad Mehta Scam- 3000Cr, 4000Cr, or 5000Cr? If inflation is taken into consideration at a 6% annual rate as declared by SEBI, the amount goes up as high as 24,000Cr(As Of 2020). But……
You probably don’t know the size of the Ketan Parekh Scam. How Big Was it- 10,000Cr? Maybe 15,000Cr? No, The gigantic scam when exposed(2001) was of the size 30-40,000(Yes, In Crores), and if again; inflation is taken into consideration at a 6% annual rate, guess what? It goes above the mark of Rs 1 Lakh Crore. Yes, that’s the actual size of the scam as of writing this blog(2020).
Do you call Harshad Mehta “The Big Bull”? Okay, what would you call Ketan Parekh then? Gigantic Bull or something? Okay… Uh…. No Lame Jokes…. Back to the point.
Comparison Of Harshad Mehta Scam and Ketan Parekh Scam In Terms Of Complexity
If you just take a look at the above image, you can tell how complex was Ketan Parekh’s method of executing the scam. After Harshad Mehta misused the Ready Forward Deal, SEBI was given more authority and power than before(It was just a non-statutory body without any statutory power). Ketan Parekh knew he can’t use the same Ready Forward Deal to execute the scam, also he couldn’t use Bank’s funds to inflate the stock prices as Harshad Mehta did.
So, he approached Institutional Investors with his institutional stockbroking firm (NH Securities) to fund his stocks(they were called K10 Stocks later on), he focused mainly on 10 stocks that were of sectors- Telecommunication, Technology, and media. But institutional investors require certain criteria to be met by the company they’re investing in, and one of those is that the company’s shares should be trading in high volumes(basically buying and selling of shares in a company creates volume: Higher the number of shares traded- Higher the volume).
Knowing this, Ketan Parekh came up with an outstandingly innovative idea- He traded shares between his own companies so that it looked like the company’s shares are being traded in high volumes through which he convinced the institutional investors to invest in those companies, and as usual, if the institutional investors invest in a company, retail investors(People like you and me) follow them, which caused the stock prices of those companies to inflate like crazy. He would then sell those stocks to make some crazy high profits.
He inflated the share price of the following companies to this extent:
HFCL(Himachal Futuristic Communications Limited)- Rs 42 to Rs 2300
ZEE- Rs 750 to 11000
GTL(Global Tele Systems)- Rs 85 to Rs 3100
Now, Ketan Parekh required another source to manipulate the stock prices consistently. He then approached the banks- MMCB and GTB and took 800Cr and 100Cr loans by both the banks respectively and used them to inflate the prices of the K10 Stocks. No one noticed why the stock prices were going up as the Dot Com Bubble was on the rise worldwide.
The End Of Ketan Parekh Story
Ketan Parekh was exposed by a (now famous)financial journalist- Sucheta Dalal (Yes, she was the one who exposed Harshad Mehta as well). It will be too complicated if I tell you how his scam was exposed. So, Screwww it!!!
Why Is Ketan Parekh Not Included in the Scam Web Series?
If you follow Hansal Mehta(Director of scam 1992), he announced that he was working on “Season 1” of a series based on the book- The Scam: who won, who lost, who got away by Sucheta Dalal and Debashis Basu.
So, there will be another season of “The Scam” web series which will completely revolve around Ketan Parekh.
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Peace 🙂
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