KETAN PAREKH SCAM

One Mans Army Scam

 Summary of the case
• The 176-point sensex crash on March1,2001 came as a major
shock for the Govt, the stock markets and the investors alike.
• The stock market was highly volatile.
• The scam shook the investor’s confidence regarding the share
markets.
• Arrest of “BOMBAY BULL” on March30,2001 was followed by
another sensex fall by 147 pts.
• He was charged with defrauding BOI of about $30 million.
• PNB and SBI were also at the receiving ends.
• Madhavapura Mercantile Cooperation Bank was also
highlighted.
 The Pathway…….
• Being a low-profile person , KP didn’t have enough money to invest.
• He bought shares at low prices and trade them continuously till
their prices go up then used to pledge the shares with banks as
collateral for funds.
• MMCB helped KP and his firms to its fullest extent.
• KP used his BOI accounts to discount 248 pay orders worth about
Rs. 24 bn between Jan and March,2001.
• KP’s modus operandi for raising funds worked well as long as share
prices soared up but it reversed when the markets started crashing
in March,2000.
• The CSE payment crisis was one of the biggest setbacks for
 Repercussions
• This scam was proved to be a setback for the
Indian economy atleast for one year.
• The functioning of the share market was
questioned.
• SEBI, the market watchdog was criticized for
its lenient actions.
 Corrective Measures
• RBI inspected the accounts of some banks.
• SEBI investigated volatility of stock markets.