Stock market scandal: Ketan Parekh along with female associates duped of Rs 2 cr

Mumbai police registered a case against former stockbroker Ketan Parekh, who was convicted in the 2001 securities scam, along with a 37-year-old woman for allegedly duping a stock market investor based in Andheri for Rs 2.17 crore.

An FIR was lodged at the Versova police station under IPC sections 406 (criminal breach of trust), 420 (cheating) and 34 (common intention) against both the suspects. However, no arrests have been made so far.

According to the FIR, the complainant, a 47-year-old stock market investor from Andheri (West), first met the woman in 2015. In December 2020, she introduced him to Ketan Parekh at a five-star hotel stars of bandra According to her, Parekh was the operator of shares of companies such as “Seacoast”, “Pessalo Digital” and “Spacenet”.

In June 2021, the woman allegedly persuaded the complainant to invest in the stock market through Parekh, promising him significant returns. On June 20, 2021, the complainant gave the woman 55 lakh rupees to invest in the company “Seacoast”. Later, he informed her that the money had been transferred to Parekh.

The FIR states that in 2021 the complainant rented a flat in Versova, where he and the woman began to live together. During that year, he claimed to have deposited Rs 71.85 lakh in his bank account, money he had reportedly raised by selling his family’s jewellery.

The complainant later discovered that the woman had purchased a Range Rover with his funds. When she confronted her, she allegedly explained that Ketan Parekh had wanted to give her the car for her birthday but asked her to use the complainant’s money as she could not provide such a large amount in cash. She assured him that his money was safe with Parekh.

After this incident, the complainant discovered that Parekh and the woman were “close friends”, as stated in the FIR.

In January and June 2022, he allegedly transferred an additional Rs 49 lakh to his account, following his claims that Parekh had advised him to buy more shares of ‘Pessalo Digital’ for significant profits.

Later, in May, July and September 2023, he allegedly handed over Rs 37 lakh in cash after she told him that Parekh had recommended investing in ‘Spacenet’ shares, according to the FIR.

The FIR states that when the complainant later asked both the woman and Parekh about his money, they ignored him. On 25 December 2023, she visited Parekh’s house and informed his wife about the relationship she believed her husband was having with the woman.

That same day, Parekh allegedly invited the complainant to meet him at a hotel, where he assured him that he would return Rs 42 lakh and provide him with 1 thousand shares of Pessalo Digital within a few days. In return, Parekh asked the complainant to tell his wife that he was not related to the woman. The complainant secretly recorded this conversation, as stated in the FIR

Later, the complainant again visited Parekh’s house and told his wife that there had been a misunderstanding and that Parekh was not having an affair.

However, according to the FIR, neither Parekh nor the accused woman returned the money to him. Also, a check given to the complainant by the woman as security was returned unpaid by the bank, Indian Express quoted police sources as saying.

The complainant claimed that Parekh urged the woman to file a false rape complaint against him. On April 13, 2024, he filed a case of rape against the complainant at the Versova police station. However, the complainant informed the court that the allegations were false and managed to get anticipatory bail, according to a police officer.

Subsequently, the complainant went to the Versova police to file a case of fraud. The police have registered the FIR and are investigating the allegations leveled by the complainant against Parekh and the woman, another officer said.

The complainant’s lawyers, Taukeer Siddiqui and Bavita Shukla, pointed out that Parekh has a history of stock market manipulation. They claimed to have evidence, including alleged audio recordings in which Parekh allegedly acknowledges that he has the money and intends to return it soon. This evidence has been presented to the researchers.

Earlier, Parekh faced numerous charges under the Securities and Exchange Board of India (SEBI) Act for stock market violations, including trading violations and failure to pay penalties. In 2003, SEBI banned him from the market for 14 years, and in 2014 a special CBI court convicted him and sentenced him to two years in prison.

Parekh, an accountant by profession, was heavily involved in the stock markets from 1999 to 2001. During this time, he manipulated the share prices of information, communication and entertainment (ICE) companies by doing circular trading. He also used the Gujarat-based Madhavpura Mercantile Cooperative Bank and the Kolkata Stock Exchange to further his plans.

Mentored by Harshad Mehta, the mastermind behind the 1991 stock market scam, Parekh led a bull market surge in 1999-2000, coinciding with the global dotcom boom and subsequent bust. Investors and traders closely followed Parekh as he artificially inflated the prices of ten ICE companies, which became known as K-10 stocks. In some cases, the companies’ promoters even provided financial backing to help inflate their share prices.

The scam came to light after a payment crisis in the Kolkata Stock Exchange, which sent stock indices plummeting. This decline was exacerbated by the bursting of the global dotcom bubble. The impact of the scam spread beyond the stock market, leading to the collapse of the Unit Trust of India (UTI) and prompting SEBI to introduce stricter regulations to prevent future market manipulation.