FIR Filed Against Stock Market Broker Ketan Parekh for Duping Investor of Rs 2.17 Crore

Mumbai: The Mumbai Police have registered a case against former stockbroker Ketan Parekh and a 37-year-old woman for allegedly cheating a share market investor from Andheri of Rs 2.17 crore. An FIR has been filed at the Versova police station under IPC Sections 406 (criminal breach of trust), 420 (cheating), and 34 (common intention). However, no arrests have been made so far.

According to the complaint, the victim, a 47-year-old investor, met the woman in 2015. In December 2020, she introduced him to Parekh at a Bandra hotel, claiming that Parekh was a stock operator for three companies: Seacoast, Pessalo Digital, and Spacenet. In June 2021, the woman allegedly convinced the complainant to invest in the stock market through Parekh, assuring him of good returns.

The complainant handed over Rs 55 lakh to the woman for investing in Seacoast, and she informed him that the money had been given to Parekh. Over the next two years, the complainant gave additional amounts totaling Rs 2.17 crore, including Rs 71.85 lakh from selling family jewelry, and cash installments for investments in other companies.

However, when the complainant sought updates on his investments, Parekh and the woman allegedly ignored him. At one point, the woman used the complainant’s money to buy a luxury car, claiming it was a birthday gift from Parekh.

In 2023, after repeated demands for his money were ignored, the complainant visited Parekh’s house and met his wife. Later, Parekh assured the complainant that he would return Rs 42 lakh and provide 1 lakh shares of Pessalo Digital, but the money was never returned. The complainant recorded their conversation as evidence.

After this, the complainant alleges that Parekh and the woman conspired to file a false rape case against him. The complainant obtained anticipatory bail and then filed a case of cheating with the Versova police. Police are now investigating the allegations.

The complainant’s advocates, Taukeer Siddiqui and Bavita Shukla, have submitted audio clips as evidence, where Parekh purportedly admits to having the complainant’s money and promises to return it. Investigations are ongoing.

Who Is Ketan Parekh?

Ketan Parekh is a former stockbroker and chartered accountant who once dominated India’s stock markets. He inherited his family’s brokerage business and quickly rose to prominence, gaining influence similar to that of Harshad Mehta, another infamous figure in India’s stock market history. Parekh became known for manipulating stock prices, especially through a strategy known as "Pump and Dump." This involves artificially inflating the price of shares by driving demand, only to sell off his holdings once the prices peaked, leaving other investors with losses.

Parekh was particularly active in the early 2000s, taking advantage of the rapid growth of the IT sector. He invested heavily in smaller companies with low market capitalisation, making huge profits by manipulating their stock prices. His network allowed him to engage in insider trading, which eventually drew the attention of authorities.

In 2001, Parekh's fraudulent activities came to light when the Bank of India accused him of swindling Rs 137 crore. This triggered a major stock market crash and led to an investigation by the Reserve Bank of India. Parekh was arrested by the Central Bureau of Investigation (CBI) for insider trading and other market manipulations. He was later banned from the stock market and sentenced.

Parekh and the 2001 Stock Market Scam

The 2001 stock market scam orchestrated by Ketan Parekh was one of the largest financial frauds in India’s history. Parekh targeted shares of companies with low market capitalisation, particularly in the information technology, media, and communication sectors. Using his network, he manipulated stock prices by pumping money into these stocks, misleading other investors into believing the companies were performing well.

Parekh’s fraudulent practices were exposed when the Bank of India accused him of cheating them out of Rs 137 crore. This revelation caused a massive crash in the stock market. It was later discovered that Parekh’s actions had affected a wide range of investors and financial institutions, leading to losses estimated at around Rs 40,000 crore.

The Securities and Exchange Board of India ( SEBI ) banned Parekh from trading in the stock market for 14 years, and a special CBI court sentenced him to two years in prison. His manipulation of the market, which resembled the tactics used by Harshad Mehta, left a lasting impact on India’s financial regulations and led to stricter oversight of stock market activities.