Ketan Parekh convicted in 14-yr-old case, sentenced to jail for two years

MUMBAI: A special CBI court on Monday convicted share broker Ketan Parekh in a 14-year-old CBI case involving stock market fraud. The special court sentenced him to two years imprisonment along with a fine of ` 50,000. Three other coaccused, including a Bank of Baroda manager, were acquitted.

Parekh’s alle ged modus operandi was to rig share prices of companies through circular trading — a series of fictitious trades where a group of brokers would buy and sell sell the same shares in sequence to rig up prices. Following this, they would offload their shares at these artificially high prices to unsuspecting investors, thus earning hefty profits.

The CBI had registered a case against the then senior manager of Bank of Baroda, Mumbai and others, alleging they had abused their official position and con- spired with Parekh.

Market regulator, the Securities and Exchange Board of India (Sebi), had in December 2003, banned Parekh and associate firms from trading in the market for 14 years.

A CBI spokesperson said Parekh pledged forged debentures and took loans in the name of his firms. Parekh then allegedly used this money to engage in circular trading.

The CBI had filed a chargesheet in the Court of Special Judge, Mumbai under the Prevention of Corruption Act, 1988 against the accused.

While the special court found Parekh guilty and convicted him, the other three public servants were acquitted by the court.

Despite the ban on him partici- pating in the stock market, there are persistent rumours that he is still active through a number of front companies.

Parekh, who had become a darling of the media and small investors, was seen in the early 2000 as the brave new face of Indian stock broking. However, like his onetime mentor Harshad Mehta, he too fell from grace when his scam came out in the open.