Download - Ketan Parekh Accounts
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PRESENTED BY,
NIKHIL THAKUR 50
VIDHI PAHADE 51
BINILA BABU 22POOJA NAGAR 25
SAMEER SHIRKE 44
SANJAY JAIN 40
FINANCIAL ACCOUNTING
KETAN PAREKH SCAM
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Who is Ketan Parekh ?
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y CA by profession.
y Learned Stock market with a finance firm ± Money care
y Inherited ownership of NH Securities.
y Also known as ³Bombay Bull´ and ³Pentafour Bull´.
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y Used online trading to achieve his goals.
y Started manipulation with buying penny stocks.
y Build a network of companies for stock market operation.
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Commencement «
Aftek Infosys --- Increasing stocks from Rs 40 levels to
Rs 2400 levels.
Pentafour --- Loss in stock due to bad publicity,
Parekh entered and pulled it up.
R anbaxy --- Initiall y stock raised from Rs 500 to Rs
750 and declined to 550.
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Cont«..
R anbaxy --- A fter KP entered ,stock raised to Rs
1,264.
Visual soft --- raised from Rs. 625 to Rs. 8448.
Sonata soft --- raised from Rs. 90 to Rs. 2150.
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The K-10 Stocks
y Stocks in which Ketan Parekh Played.
y Mostl y media stocks with low liquidity.
y Ketan Parekh traded in these stocks with fictitious names.
y He operated through small stock exchanges like KSE.
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Satyam Computers.
Himachal Futuristic .
SSI Ltd.
HFCL.
Global Tele systems (Global).
Zee Tele films.
Ranbaxy.
Penta Media Graphics.
Visual soft.
DSQ Software.
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Stock movement of some K -10 Companies
0
1000
2000
3000
4000
50006000
7000
8000
9000
A ftek Infosys Ranbaxy Visual soft Sonata soft
Before
A fter
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The Scams«..
y Loans were taken from banks to start the scam.
y
The banks included ±
GLOB A L TR UST B A NK.
B A NK OF INDI A .
UNIT TR UST OF INDI A (UTI).
M A DH A VPUR A MER CA NTILE COPER A TIVE B A NK.
ST A TE B A NK OF INDI A .
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Ketan issued cheques drawn on Bank of India to MMCB.
MMCB issued pay orders against those cheques.
These pay orders were discounted at Bank of India around 2400
crores.
MMCB issued funds to Ketan Without proper securities.
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Creation of fake companies.
Borrowed from MMCB branch at Mumbai.
Rs 120 crore securities scam at the Calcutta Stock
Exchange
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How Ketan ran out of Luck ???
y A team of traders insisted to sell all K -10 stocks.
y This leads to fall of prices of K -10 stocks.
y In order to save K -10 stock prices ketan invested all illegal money.
y Still selling trend continues and ketan lost all the money.
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How Ketan got Exposed ???
y Sucheta Dalal, was the first to expose his scams through hernews columns.
y A fter defaults of pay orders BOI launched complain againstKetan.
y Ketan got arrested by CBI.
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A ftermath
y BSE index crashed by around 1ooo points within a week.
y MMCB got bankrupted.
y Total loss in banking sector = Rs. 1200 crores.
y Ketan Parekh still owes Rs. 13o crores to Bank of India.
y Ketan Parekh released on bail.
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y he has been debarred from trading in the Indian stock exchanges till 2017.
y Parekh's sole conviction, which carried a one year sentence,came as a result of a transaction he conducted invol ving aunit of Canara bank.
y Ketan Parekh is rumored to be still trading under differentcompanies.
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Damage Control By SEBI
y All the broker directors of Bombay and Kolkata stock exchange were fired. All brokers acting as directorsand other office bearers of the Bombay Stock Exchangehave been suspended for alleged insider trading. Inorder to prevent misuse of sensitiveinformation by broker-directors, stock markets will be corporatized soon
y Placed enquiry on team of competitor traders for their short se lling.( On March 8, 2001, the SEBI bannednaked short sales. In simple words, it means that all
short sales have to be covered by an equal amount of long purchases)
y all the trading details now has to be submitted dail y.
y In order to increase liquidity, SEBI has allowed banks to offer collateralized lending onl y through BSE andNSE.
y Please deal onl y with and through SEBI registered members of the Stock Exchange and are
enabled to trade on the Exchange. All SEBI registered members are given a registration No., which may be verified from SEBI. The details of all members of NSE/BSE and whether they areenabled to trade may be verified from NSE/BSE website .
y INVESTIG A TE UNUSU A L PRICE MOVEMENT OF SH A RES
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What should be done to avoid scams???
y Regular inspection from RBI.(RBI was inspecting the account once in two years, which created ample scope for violation of ruler)
y Strengthening norms and regulations.(Lack of implication of rules andregulation. Rolling settlements (which ensures that the settlement takesplace two days after trading) will now be compulsory )
Coordination of RBI and SEBI. ( A SEBI-RBI constituted committee wouldmeet periodicall y to sort out issues, if any, arising out of overlapping
jurisdiction of the currency futures market. )
Empowering SEBI and investing
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Regular inspection from RBI.To provide license to dealers and brokers. It can ban on the trading of those brokers who
are involved in fraudulent and unfair trade practices relating to stock market.It can impose the penalties on capital market intermediaries if they involve in insider trading.
SEBI uses his powers to audit the performance of different Indian stock exchange for bringing transparency in the
working of stock exchanges.
Time to time, SEBI arranges scheduled workshops to educate the investors. On 22 may 2010 SEBI imposed workshop. If
you are investor, you can get education through SEBI leaders by getting update information on this page
Strengthening norms and regulations.
Coordination of RBI and SEBI.(to maintain the flow of economy by rbi and sebi to maintain transperancy in trading.)
Empowering SEBI.