Parekh: Caged finally

Mumbai, Dec. 17: The Securities and Exchange Board of India (Sebi) has debarred Ketan Parekh (KP), his cousin Kartik K. Parekh and seven firms controlled by them from the capital market for 14 years. The December 12 order takes immediate effect and is intended to punish the Big Bull and his cronies for their role in the 2001 stock scam.

Classic Credit, Panther Fincap and Management Services, Luminant Investments, Chitrakut Computers, Saimangal Investrade, Classic Infin and Panther Investrade will not be allowed to deal in securities, directly or indirectly, for their links with KP.

Today’s decree stems from the findings that came out of Sebi investigations into excessive volatility on stock exchanges during mid-February and mid-March 2001. The objective was to determine whether certain entities were distorting share prices and manipulating markets.

“Investigations into deals executed between April 2000 and March 2001 showed that shares sold by Classic Credit, Luminant Investment Pvt Ltd and Panther Fincap through Credit Suisse First Boston Securities (CSFB) and Dresdner Kleinworth Benson Securities (DKB) were bought either by the same entity or by those connected/controlled by Ketan V. Parekh or Kartik Parekh,” the market regulator order states.

The chords of Classic, Luminant, Panther, Saimangal, NH Securities Ltd, Classic Shares and Stock Brokers Ltd, Chitrakut, Classic Infin, and Panther Investrade Ltd were found to reach Ketan Parekh.

Sebi said its investigation showed KP entities indulging in synchronised trades, financing transactions, circular trading, creation of artificial volumes and benchmarking of share prices by executing fake transactions that violated the integrity of the securities market and Sebi regulations.

Today’s ban comes after the Parekhs were slapped with a show-cause notice on July 30, 2002, asking them to explain why they should not be shut out of stock exchanges.

One of the cases probed by the market watchdog was that of Lupin Laboratories, whose share was among those manipulated by the KP and his outfits.

“According to me, the entities connected to, and controlled by, Parekh, if allowed to continue in the securities market, could pose a threat to the integrity of the securities market and endanger the interests of investors,” Sebi chairman G. N. Bajpai said.

“This is sufficient to conclude that the ulterior motive of Ketan Parekh and these entities was responsible for creation of artificial volumes by misusing the stock exchange mechanism, thereby misleading investors in order to make undue gains,” he added.

Ketan Parekh is also facing a CBI probe in a pay-order scam — reported to be worth over Rs 130 crore — at the Ahmedabad-based Madhavpura Co-operative Bank.