Ketan Parekh can best be described as the Pied Piper of Dalal Street. For two years, marketmen followed his every action because all he touched turned to gold. Better known as the Pentafour Bull, he kept a low profile, except when he threw a millennium bash that was attended by politicians, business magnates and film stars. A chartered accountant by training, Parekh came from a family of brokers, which helped him create a trading ring of his own. Between 1999 and 2000, as the technology bubble was engulfing the rest of the world, the stock market in India sprang to life too.
Be it investment firms, mostly controlled by promoters of listed companies, overseas corporate bodies or cooperative banks, all were ready to hand the money to Parekh, which he used to rig up stock prices by making his interest apparent. In no time, scrips like Visualsoft rose from Rs 625 to Rs 8,448 per share and Sonata Software from Rs 90 to Rs 2,150. But the vicious cycle of fraud did not end with price rigging. The inflated stocks had to be dumped onto someone in the end, for which Parekh used financial institutions like the UTI. But the party ended rather abruptly a day after the Union Budget was presented in February 2001. A bear cartel started disrupting Parekh's party by hammering prices of the K-10 stocks, precipitating a payment crisis in Kolkata.
As SEBI investigated, it was evident that bank and promoter funds were used to rig the markets. Parekh was arrested in March that year and was in custody for 53 days. In the aftermath of the scam, many gaping loopholes in the market were plugged. The trading cycle was now reduced from one week to one day. Badla was banned and operators could not carry forward trade in its primitive form. Forward trading was formally introduced in the form of exchange-traded derivatives to ensure a well-regulated futures market. Broker control over stock exchanges was demolished. It's perhaps thanks to the Pentafour Bull that India's stock markets are today considered safe. And to his credit, Parekh forced lethargic policy-makers to institute reforms in the financial system. He is, however, now suspected to be operating in the markets through conduits. Parekh will remain a work-in-progress for regulators
Copyright@Indiatoday.in
Copyright@Indiatoday.in
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