Ketan Parekh was a Mumbai-based stock broker. He is from a well-to-doGujarati family involved in share trading, and Ketan was involved in the
shares scam of 2000-2001 on the Indian Stock Market.And he was arrested
because of scam on 2 december 2002 in kolkata.
News coming from Securities market saying that : Big bull Ketan Parekh’s
shadow still looms large over Indian markets. Five-and-a half-years after
he was banned from trading, the capital market regulator has discovered
that he is still executing trades through front-entities.
While banning 26 entities from dealing in the securities market, the
Securities and Exchange Board of India has asked the income tax
department, the Enforcement Directorate, stock exchanges and depositories
to investigate the matter further. The regulator has used pointers from
income tax records, trading data, phone records and off-market
transaction to establish a link involving a complex chain of
transactions.
Meanwhile, Sebi has given the banned entities 15 days to respond.
In a 114-page report that was put up on the regulator’s website late this
evening, Sebi said preliminary investigations revealed that Parekh “has
conveniently used the connected clients at will as his conduits to
execute trades desired by him in the securities market”.
Sebi stumbled on Parekh’s presence in the stock markets when it was
probing a case of synchronised trading by five entities — Maruti
Securities, Kundan Leasing and Finance, Chandra Financial Services, Jay
Investrade and HSM Financial Services.
These entities were under scrutiny for executing synchronised deals in
Cals Refineries, Confidence Petroleum, Bang Overseas, Temptation Foods
and Shree Precoated Steels, now known as Ajmera Realty & Infra India,
over 26 months, starting January 2007.
During the investigations, Sebi observed that many of the entities, which
executed 255 synchronised deals during the period under investigation,
were located at the same premises in Mumbai. In addition, two individuals
— Harsh Shirish Maniar and Jay Shirish Maniar — were directors in three
of the companies.
The permanent account number of these two individuals revealed that their
father, Shirish Shantilal Maniar, had been chargesheeted by the Central
Bureau of Investigation (CBI) along with Ketan Parekh and others, in the
scam involving the Madhavpura Mercantile Co-operative Bank.
Sebi depended on inputs received from the income tax department, which
had investigated the source of funds for loan repayments to Madhavpura
Bank by Parekh. The tax department observed that in August 2008, Rs 26.43
crore was paid by the KP Group of companies to Madhavpura Bank.
To do so, Parekh is said to have opted for multi-layered transactions
through which the payment originated from group company KNP Securities
and was routed through various entities.
Sebi said the fund flow chart, prepared by the income tax department,
showed many of the connected clients named in the order appeared as
conduits for the funds originating from the Parekh group company.
The five entities that were being probed for synchronised trading were
found to have dealt among themselves and also transferred shares through
off-market transactions, thereby creating unnatural market volumes.
What also raised suspicion was the fact that clients claimed to have
received an interest-free loan, which was immediately ‘on-lent’ as an
interest free loan to the other party. “This is highly strange and
inexplicable,” the report said. In addition, the parties did not have any
return loan agreement.
From the trading data, it was observed that in the scrips of Cals and
Bang, connected clients had substantial trading concentrations in August
2008, when the funds originating from a KP company were flowing to the
connected clients.The Sebi order also pointed to the possibility of the connected clients
acting as conduits for layering and integration of money.
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