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  • Ketan Parekh Scam.

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    helikhatri
    8 просмотров2 страницы
    What happened? KETAN PAREKH STORY:- Ketan Parekh is a name which rings a bell in our minds as the man behind one of the biggest scams of Indian stock exchange in 2000-2001. Ketan Parekh-also known as the “Bombay Bull” was a known broker of Indian stock exchange. Over the years, Ketan built a network of companies mainly concentrated in Mumbai. According to market sources, although he was a big broker, he didn’t have enough funds to buy large stocks. He borrowed funds from various companies and banks for this purpose. He used to raise loan from the banks by offering shares as collateral security. The companies in which KP held stakes included Amitabh Bachchan Corporation Limited (ABCL), Mukta Arts, Tips and Pritish NandyCommunications. He also had stakes in HFCL, Global Telesystems (Global), Zee telefilms, Crest Communications, and PentaMedia Graphics . Ketan selected these companies for investment with help from his research team, which listed high growth companies with a small capital base. According to media reports, KP took advantage of low liquidity in these stocks, which eventually came to be known as the ‘K-10′ stocks. The shares were held through KP’s company, Triumph International. In July 1999, he held around 1.2 million shares in Global. KP controlled around 16% of Global’s floating stock, 25% of Aftek Infosys, and 15% each in Zee and HFCL. He started trading of these shares within the network of his own companies at no profit no loss with the malafide intention of creating buying pressure for shares of K-10.Continuous trading by Ketan Parekh within the network of his own companies make other brokers in the market believe that something is happening inside K-10. Thus brokers started buying shares of K-10 for themselves and also urge their clients to buy these shares. The buoyant stock markets from January to July 1999 helped the K-10 stocks increase in value substantially. HFCL soared by 57% while Global increased by 200%. As a result, brokers and fund managers started investing heavily in K-10 stocks. Mutual funds like Alliance Capital, ICICI Prudential Fund and UTI also invested in K-10 stocks, and saw their net asset value soaring. By January 2000, K-10 stocks regularly featured in the top five traded stocks in the exchanges. HFCL’s traded volumes shot up from 80,000 to 1,047,000 shares. Global’s total traded value in the Sensex was Rs 51.8 billion. As such huge amounts of money were being pumped into the markets, it became tough for KP to control the movements of the scrips. Also, it was reported that the volumes got too big for him to handle. Analysts and regulators wondered how KP had managed to buy such large stakes. At that time Ketan thought of selling his shares but it is said that some senior officials of Zee telefilms told him to continue trading till the share value reach Rs 1000 mark and thus Ketan continued. He finally sold all his shares of zee at market price of Rs 1100. Though he earned enormous profits but due to sudden selling of huge number of shares and consequent fall in trading led to a fall in the markets and thus share price fall drastically to around 200 again. Investors lost heavily and many committed suicide. That was what Ketan did. This scam created a historical impact on financial status of Bombay Stock Exchange and also on faith of investors in its working. Securities and Exchange Board of India (SEBI) was highly criticized as being reactive rather than proactive. The market regulator was blamed for being lax in handling the issue of unusual price movement and tremendous volatility in shares over an 18-month period prior to February 2001.

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    What happened? KETAN PAREKH STORY:- Ketan Parekh is a name which rings a bell in our minds as the man behind one of the biggest scams of Indian stock exchange in 2000-2001. Ketan Parekh-also known as the “Bombay Bull” was a known broker of Indian stock exchange. Over the years, Ketan built a network of companies mainly concentrated in Mumbai. According to market sources, although he was a big broker, he didn’t have enough funds to buy large stocks. He borrowed funds from various companies and banks for this purpose. He used to raise loan from the banks by offering shares as collateral security. The companies in which KP held stakes included Amitabh Bachchan Corporation Limited (ABCL), Mukta Arts, Tips and Pritish NandyCommunications. He also had stakes in HFCL, Global Telesystems (Global), Zee telefilms, Crest Communications, and PentaMedia Graphics . Ketan selected these companies for investment with help from his research team, which listed high growth companies with a small capital base. According to media reports, KP took advantage of low liquidity in these stocks, which eventually came to be known as the ‘K-10′ stocks. The shares were held through KP’s company, Triumph International. In July 1999, he held around 1.2 million shares in Global. KP controlled around 16% of Global’s floating stock, 25% of Aftek Infosys, and 15% each in Zee and HFCL. He started trading of these shares within the network of his own companies at no profit no loss with the malafide intention of creating buying pressure for shares of K-10.Continuous trading by Ketan Parekh within the network of his own companies make other brokers in the market believe that something is happening inside K-10. Thus brokers started buying shares of K-10 for themselves and also urge their clients to buy these shares. The buoyant stock markets from January to July 1999 helped the K-10 stocks increase in value substantially. HFCL soared by 57% while Global increased by 200%. As a result, brokers and fund managers started investing heavily in K-10 stocks. Mutual funds like Alliance Capital, ICICI Prudential Fund and UTI also invested in K-10 stocks, and saw their net asset value soaring. By January 2000, K-10 stocks regularly featured in the top five traded stocks in the exchanges. HFCL’s traded volumes shot up from 80,000 to 1,047,000 shares. Global’s total traded value in the Sensex was Rs 51.8 billion. As such huge amounts of money were being pumped into the markets, it became tough for KP to control the movements of the scrips. Also, it was reported that the volumes got too big for him to handle. Analysts and regulators wondered how KP had managed to buy such large stakes. At that time Ketan thought of selling his shares but it is said that some senior officials of Zee telefilms told him to continue trading till the share value reach Rs 1000 mark and thus Ketan continued. He finally sold all his shares of zee at market price of Rs 1100. Though he earned enormous profits but due to sudden selling of huge number of shares and consequent fall in trading led to a fall in the markets and thus share price fall drastically to around 200 again. Investors lost heavily and many committed suicide. That was what Ketan did. This scam created a historical impact on financial status of Bombay Stock Exchange and also on faith of investors in its working. Securities and Exchange Board of India (SEBI) was highly criticized as being reactive rather than proactive. The market regulator was blamed for being lax in handling the issue of unusual price movement and tremendous volatility in shares over an 18-month period prior to February 2001.

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    8 просмотров2 страницы

    Ketan Parekh Scam.

    Загружено:

    helikhatri
    What happened? KETAN PAREKH STORY:- Ketan Parekh is a name which rings a bell in our minds as the man behind one of the biggest scams of Indian stock exchange in 2000-2001. Ketan Parekh-also known as the “Bombay Bull” was a known broker of Indian stock exchange. Over the years, Ketan built a network of companies mainly concentrated in Mumbai. According to market sources, although he was a big broker, he didn’t have enough funds to buy large stocks. He borrowed funds from various companies and banks for this purpose. He used to raise loan from the banks by offering shares as collateral security. The companies in which KP held stakes included Amitabh Bachchan Corporation Limited (ABCL), Mukta Arts, Tips and Pritish NandyCommunications. He also had stakes in HFCL, Global Telesystems (Global), Zee telefilms, Crest Communications, and PentaMedia Graphics . Ketan selected these companies for investment with help from his research team, which listed high growth companies with a small capital base. According to media reports, KP took advantage of low liquidity in these stocks, which eventually came to be known as the ‘K-10′ stocks. The shares were held through KP’s company, Triumph International. In July 1999, he held around 1.2 million shares in Global. KP controlled around 16% of Global’s floating stock, 25% of Aftek Infosys, and 15% each in Zee and HFCL. He started trading of these shares within the network of his own companies at no profit no loss with the malafide intention of creating buying pressure for shares of K-10.Continuous trading by Ketan Parekh within the network of his own companies make other brokers in the market believe that something is happening inside K-10. Thus brokers started buying shares of K-10 for themselves and also urge their clients to buy these shares. The buoyant stock markets from January to July 1999 helped the K-10 stocks increase in value substantially. HFCL soared by 57% while Global increased by 200%. As a result, brokers and fund managers started investing heavily in K-10 stocks. Mutual funds like Alliance Capital, ICICI Prudential Fund and UTI also invested in K-10 stocks, and saw their net asset value soaring. By January 2000, K-10 stocks regularly featured in the top five traded stocks in the exchanges. HFCL’s traded volumes shot up from 80,000 to 1,047,000 shares. Global’s total traded value in the Sensex was Rs 51.8 billion. As such huge amounts of money were being pumped into the markets, it became tough for KP to control the movements of the scrips. Also, it was reported that the volumes got too big for him to handle. Analysts and regulators wondered how KP had managed to buy such large stakes. At that time Ketan thought of selling his shares but it is said that some senior officials of Zee telefilms told him to continue trading till the share value reach Rs 1000 mark and thus Ketan continued. He finally sold all his shares of zee at market price of Rs 1100. Though he earned enormous profits but due to sudden selling of huge number of shares and consequent fall in trading led to a fall in the markets and thus share price fall drastically to around 200 again. Investors lost heavily and many committed suicide. That was what Ketan did. This scam created a historical impact on financial status of Bombay Stock Exchange and also on faith of investors in its working. Securities and Exchange Board of India (SEBI) was highly criticized as being reactive rather than proactive. The market regulator was blamed for being lax in handling the issue of unusual price movement and tremendous volatility in shares over an 18-month period prior to February 2001.

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    © All Rights Reserved
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    What happened?

    KETAN PAREKH STORY:-


    Ketan Parekh is a name which rings a bell in our minds as the
    man behind one of the biggest scams of Indian stock
    exchange in 2000-2001. Ketan Parekh-also known as the
    Bomba Bull! was a known broker of Indian stock exchange.
    "#er the ears$ Ketan built a network of com%anies mainl
    concentrated in &umbai. 'ccording to market sources$
    although he was a big broker$ he didn(t ha#e enough funds
    to bu large stocks. )e borrowed funds from #arious
    com%anies and banks for this %ur%ose. )e used to raise loan
    from the banks b o*ering shares as collateral securit. +he
    com%anies in which KP held stakes included 'mitabh
    Bachchan ,or%oration -imited .'B,-/$ &ukta 'rts$ +i%s and
    Pritish 0and,ommunications. )e also had stakes in )1,-$
    2lobal +elesstems .2lobal/$ 3ee tele4lms$ ,rest
    ,ommunications$ and Penta&edia 2ra%hics . Ketan selected
    these com%anies for in#estment with hel% from his research
    team$ which listed high growth companies with a small
    capital base. 'ccording to media re%orts$ KP took
    ad#antage of low li5uidit in these stocks$ which e#entuall
    came to be known as the K-10 stocks.
    +he shares were held through KP(s com%an$ +rium%h
    International. In 6ul 1777$ he held around 1.2 million shares
    in 2lobal. KP controlled around 189 of 2lobal(s :oating
    stock$ 2;9 of 'ftek Infoss$ and 1;9 each in 3ee and )1,-.

    )e started trading of these shares within the network of his
    own com%anies at no %ro4t no loss with the mala4de
    intention of creating buing %ressure for shares of K-
    10.Continuous trading by Ketan Parekh within the network of
    his own companies make other brokers in the market
    believe that something is happening inside K-
    10. +hus brokers started buing shares of K-10 for
    themsel#es and also urge their clients to bu these shares.
    +he buoant stock markets from 6anuar to 6ul 1777 hel%ed
    the K-10 stocks increase in #alue substantiall. )1,- soared
    b ;<9 while 2lobal increased b 2009. 's a result$ brokers
    and fund managers started in#esting hea#il in K-10 stocks.
    &utual funds like 'lliance ,a%ital$ I,I,I Prudential 1und and
    =+I also in#ested in K-10 stocks$ and saw their net asset
    #alue soaring. B 6anuar 2000$ K-10 stocks regularl
    featured in the to% 4#e traded stocks in the exchanges.
    )1,-(s traded #olumes shot u% from >0$000 to 1$0?<$000
    shares. 2lobal(s total traded #alue in the @ensex was As ;1.>
    billion.
    's such huge amounts of mone were being %um%ed into
    the markets$ it became tough for KP to control the
    mo#ements of the scri%s. 'lso$ it was re%orted that the
    #olumes got too big for him to handle. 'nalsts and
    regulators wondered how KP had managed to bu such large
    stakes.
    't that time Ketan thought of selling his shares but it is said
    that some senior oBcials of 3ee tele4lms told him to
    continue trading till the share #alue reach As 1000 mark and
    thus Ketan continued. )e 4nall sold all his shares of Cee at
    market %rice of As 1100. +hough he earned enormous %ro4ts
    but due to sudden selling of huge number of shares and
    conse5uent fall in trading led to a fall in the markets and
    thus share %rice fall drasticall to around 200 again.
    In#estors lost hea#il and man committed suicide. +hat was
    what Ketan did.
    +his scam created a historical im%act on 4nancial status of
    Bomba @tock Dxchange and also on faith of in#estors in its
    working. Securities and !change "oard of #ndia $S"#% was
    highly critici&ed as being reactive rather than proactive. +he
    market regulator was blamed for being lax in handling the
    issue of unusual %rice mo#ement and tremendous #olatilit
    in shares o#er an 1>-month %eriod %rior to 1ebruar 2001.

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