Stock Market Scandal: Ketan Parekh along with female associate dupe investors of Rs 2 cr

The 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 defrauding an Andheri-based share market investor of 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 suspects. However, no arrests have been made so far.

As per the FIR, the complainant, a 47-year-old share 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 in Bandra. According to her, Parekh was the stock operator for companies like '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 handed over Rs 55 lakh to the woman for investment in the 'Seacoast' company. She later informed him 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 started living together. Over that year, he claimed to have deposited Rs 71.85 lakh into her bank account, money he had reportedly gathered by selling his family’s jewelry.

Later, the complainant discovered that the woman had bought a Range Rover using his funds. When he confronted her, she allegedly explained that Ketan Parekh had wanted to gift her the car for her birthday but asked her to use the complainant’s money instead, as he couldn't provide such a large sum in cash. She reassured him that his money was safely with Parekh.

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

In January and June 2022, he allegedly transferred an additional Rs 49 lakh into her account, following her claims that Parekh had advised purchasing more shares of 'Pessalo Digital' for significant profits.

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

The FIR indicates that when the complainant later inquired about his money from both the woman and Parekh, they disregarded him. On December 25, 2023, he reportedly visited Parekh’s home and informed his wife about the affair he 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 1 lakh shares of 'Pessalo Digital' within a few days. In exchange, Parekh requested the complainant to tell his wife that he was not involved with the woman. The complainant secretly recorded this conversation, as noted in the FIR

The complainant later visited Parekh’s home once more 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 his money. Additionally, a cheque 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 then urged the woman to file a false rape allegation against him. On April 13, 2024, she filed a rape case against the complainant at the Versova police station. However, the complainant informed the court that the allegations were false and managed to secure anticipatory bail, according to a police officer.

The complainant subsequently went to the Versova police to file a cheating case. The police have registered the FIR and are investigating the allegations made by the complainant against Parekh and the woman, according to another officer.

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

Previously, Parekh faced numerous charges under the Securities and Exchange Board of India (SEBI) Act for stock exchange violations, including trading infractions 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, a chartered accountant by profession, became heavily involved in the stock markets from 1999 to 2001. During this time, he manipulated the prices of stocks from information, communication, and entertainment (ICE) companies by engaging in circular trading. He also used the Gujarat-based Madhavpura Mercantile Cooperative Bank and the Kolkata stock exchange to further his schemes.

Mentored by Harshad Mehta, the mastermind behind the 1991 stock market scam, Parekh led a bull market rally between 1999 and 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 came to be known as K-10 stocks. In some cases, company promoters even provided him with financial backing to help inflate their share prices.

The scam came to light following a payment crisis at the Kolkata stock exchange, which caused stock market indices to plummet. This downfall was exacerbated by the bursting of the global dotcom bubble. The impact of the scam extended beyond the stock market, leading to the collapse of UTI (Unit Trust of India) and prompting SEBI to introduce stricter regulations to prevent future market manipulations.