Ketan Parekh Scam-by navneet bali

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““All my lifetime's savings are gone. All my lifetime's savings are gone. I don't know how to feed my family."I don't know how to feed my family."

- A small investor hit by the Ketan - A small investor hit by the Ketan Parekh scam, in April 2001.Parekh scam, in April 2001. ” ”

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KETAN PAREKH AND 2001 KETAN PAREKH AND 2001 SCAMSCAM

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LESSONS FOR YOU AND ME

CONTENTCONTENTSS

REPUBLIC OF SCAMS

WHO WAS KETAN PAREKH AND HIS K10 STOCKS

WHAT WAS NOT DONE WHAT SHOULD HAVE BEEN DONE

THE SCAM STORY

SEBI SLEPT AS STOCK MARKET BLED

THE BEGINNING

WHY STOCK MARKET ATTRACTS

KETAN PAREKH’S MODUS OPERANDI

INDIAN ECONOMY THROUGH THE SCAMS

CONDITIONS PRIOR TO K-10 SCAM

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REPUBLIC OF SCAMSREPUBLIC OF SCAMS

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TOTAL SCAM MONEY(APPROX)TOTAL SCAM MONEY(APPROX)

SINCE1992: SINCE1992:

Rs73000000000000 Cr (73 Lakh Cr)Rs73000000000000 Cr (73 Lakh Cr)

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REPUBLIC OF SCAMSREPUBLIC OF SCAMSRamlinga Raju , Founder, Ramlinga Raju , Founder,

Satyam Computers.Satyam Computers.Amount : Rs.8,000 CrsAmount : Rs.8,000 CrsThe fraud: Cooked up The fraud: Cooked up account books of his account books of his company.company.Method: Inflated revenues Method: Inflated revenues and hid liabilities.and hid liabilities.

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REPUBLIC OF SCAMSREPUBLIC OF SCAMSHarshad Mehta,Broker.Harshad Mehta,Broker.

Amount : Rs.4,000Cr Amount : Rs.4,000Cr The fraud: The fraud: Responsible for the Responsible for the securities scam of securities scam of 1992.1992.Method: Accused of Method: Accused of diverting funds from diverting funds from banks to stock brokers banks to stock brokers

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Dinesh Dalmia former Dinesh Dalmia former MD, DSQ Software.MD, DSQ Software.

Amount : Rs.595 CrAmount : Rs.595 Cr

The fraud: Dalmia The fraud: Dalmia resorted to illegal ways resorted to illegal ways of making money of making money through the shares of through the shares of DSQ softwareDSQ software..

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KETAN PAREKH - 1500 Cr(AGGREGATE BORROWINGS)

C R BHANSALI - 1200 Cr

UDAY GOYAL- 210 Cr

ABDUL KARIM TELGI - 171.33 Cr

VIRENDRA RASTOGI - 43 Cr

THE UTI SCAM – 32 Cr

SANJAY AGARWAL – 92 Cr

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INDIAN ECONOMY THROUGH THE SCAMINDIAN ECONOMY THROUGH THE SCAM

PANIC RUN ON THE BOURSES

TOTAL WEALTH OF APPROX $32B WAS WIPED OUT IN MARKET CAPITALIZATION

SENSEX LOST 700 POINTS

SHOCK WAVES FELT IN CALCUTTA & OTHER FINANCIAL CENTRES

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INDIAN ECONOMY THROUGH THE SCAMSINDIAN ECONOMY THROUGH THE SCAMS

BANK OF INDIA,SBI,PNB SUFFERED HUGE LOSSES

TOTAL BANKING LOSS OF 12000 MILLIONS ACCORDING TO RBI

NEXUS OF BIG INSTITUTIONAL INVESTORS-BUSINESSMAN-BANKER-OFFICIAL-POLITICIAN MANIPULATED

FINANCIAL MARKETS

HUNDREDS OF INVESTORS ON THE BRINK OF BANKRUPTCY

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WHY STOCK MARKETS WHY STOCK MARKETS ATTRACT USATTRACT US

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WHY STOCK MARKET ATTRACTSWHY STOCK MARKET ATTRACTS

VICIOUS CYCLE OF GREED AND FEAR DRIVES HUMANS

LOW INTEREST RATES IN THE BANKING SYSTEM

IMMENSE LIQUIDITY IN HANDS OF NEO RICH

OPENING OF INDIAN ECONOMY

HISTORY OF SCIRPS GIVING HIGH RETURNS

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WHY STOCK MARKET ATTRACTSWHY STOCK MARKET ATTRACTS

DESIRE TO MAKE QUICK AND EASY MONEY

IMMENSE MEDIA PROPAGANDA –GLORIFYING STOCK MARKET

RISE OF FLY BY NIGHT BROKERS AND FINANCIAL COMPANIES

UNAWARENESS ABOUT THE INHERENT RISKS

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CONDITIONS PRIOR TO SCAMCONDITIONS PRIOR TO SCAM

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CONDITIONS PRIOR TO K-10 SCAMCONDITIONS PRIOR TO K-10 SCAM

LOOPHOLES IN REGULATORY MECHANISM

SEBI-WITHOUT TEETH

RBI-NO PRUDENT NORMS OR SUPERVISION

KETAN PAREKHS ASTUTE UNDERSTANDING OF MARKETS

GREED ON ALL FRONTS-PERSONAL AND COLLECTIVE

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BELIEF OF “CAN GETAWAY WITH MURDER”

MANIPULATION POSSIBLE OF BANKING SYSTEM

EVERY ONE WANTING A PIECE OF CAKE IN SHARE MARKET

SUBSTANTIAL INCREASE IN DISPOSABLE INCOME

INCREASE IN GREED AND RISK TAKING CAPACITY

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PROTECTORS OF PUBLIC MONEY(BANKS)-BECOMING THE THIEVES

EVERY FINANCIAL INSTITUTION WAITING TO JUMP INTO STOCK MARKET

BELIEF IN KETAN PAREKH AS A MAGICIAN WITH SUPER NATURAL POWERS

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KP -THE GREAT AND HIS K-10KP -THE GREAT AND HIS K-10

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THE PERSONALITY OF KP:THE BOMBAY BULL

A CHARTERED ACCOUNTANT BY PROFESSION

MANAGED FAMILY BUSINESS–NH SECURITIES

STARTED DREAMING BIG WITH DOT COM BOOM

LEARNED STOCK MARKET WITH A FINANCE FIRM-MONEY CARE

HE TESTED HIS SKILLS OF FINANCIAL ENGINEERING IN PENTAFOUR

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THE PERSONALITY OF KP:THE BOMBAY BULL

RANBAXY WAS THE SECOND SPOTTED COMPANY

BUILT A NETWORK OF COMPANIES FOR STOCK MARKET OPERATIONS

USED ONLINE TRADING TO ACHIEVE HIS GOALS

STARTED MANIPULATIONS BY BUYING STOCKS OF LITTLE KNOWN COMPANIES

DEVELOPED STRONG RELATIONS

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K-10 STOCKS:THE KEY TO WEALTH OF KPK-10 STOCKS:THE KEY TO WEALTH OF KP

K-10 WERE THE STOCKS IN WHICH KP PLAYED

THEY WERE MOSTLY MEDIA STOCKS WITH LOW LIQUIDITY

MUTUAL FUNDS INVESTED HEAVILY IN K-10 STOCKS

K-10 STOCKS BECAME TALK OF THE TOWN

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K-10 REGULARLY FEATURED IN TOP TRADED STOCKS IN 2000

KP OPERATED THROUGH SMALLER EXCHANGES

KP TRADED IN THESE STOCKS IN FICTITIOUS NAMES

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ABCL

MUKTA ARTS

TIPS

PRITISH NANDY COMMUNICATIONS

HFCL

GLOBAL TELEFILMS

ZEE TELEEFILMS

CREST COMMUNICATIONS

PENTA MEDIA

AFTEK

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THE MODUS OPERANDI OF KP

Prices are jacked UP by Circular

Trading

Bear Cartel Sells the

Inflated stocksPrices reduce

Other InvestorsAlso invest In KP stocks

(1)KP buys shares Of select companies

Banks andRetail Investors

Loose

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THE SCAM STORYTHE SCAM STORY

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KP GETS INTO STOCK MARKET TO MAKE IT BIG

STARTS INVESTING –SUCCESS FOLLOWS

KP THE PIED PIPER-PEOPLE START FOLLOWING HIS SELECTION

KP GETS ADVENTUROUS

ISSUES CHEQUES DRAWN ON BOI TO MMCB

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MMCB ISSUES PAY ORDERS

PAY ORDERS ARE DISCOUNTED AT BOI

MMCB CROSSES ITS CAPITAL NORMS FOR INVESTING IN CAPITAL MARKET

KP USES BOI ACCOUNT TO DISCOUNT 248 PAY ORDERS

TOTAL WORTH OF PAY ORDERS 24 BILLION

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BOI EVENTUALLY LOSSES 1.2 BILLION

SECOND ROUTE KP USES IS HIS FAVORITE-MMCB

BORROWS 250 CRORES FROM GTB AND 1000 CRORES FROM MMCB

RBI REGULATIONS THEN ALLOWED ONLY 15 CRORES

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KP BUYS MORE STOCKS RISE AGAIN

HFCL RISES FROM RS 790TO 1353,VISUALSOFT 625 TO 8448

DEC 2000 NASDAQ FALLS AGAIN

KPS SWAN SONG –AS BEAR CARTEL TIGHTENS GRIP

KP IS DROWNED IN HIS OWN K-10

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KP FACE LIQUIDITY CRUNCH.CSE HAS PAYMENT ISSUES

STOCK VALUE OF KP STOCKS DECLINES FROM 12 TO 6-7 BILLION

SITUATION WORSENED –KPS BADLA PAYMENT DECLINED

CSE BROKERS DEFAULT

BY MID MARCH 2001 K-10 STOCKS VALUE IS 2.5-3 BILLION

KETAN PAREKH ARRESTED

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SENSEX FELL 28% IN TWO MONTHS

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SOME K-10 STOCKS(Rs)SOME K-10 STOCKS(Rs)COMPANY 31 MARCH 01 31 DEC 2009

MUKTA 136.85 50

TIPS 61.80 48.20

GLOBAL TELESYSTEMS 161.50 381

ZEE TELE 121.60 250

PENTAMEDIA 89.20 3.88

AFTEK 30.65 16.85

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EVERY COIN HAS TWO SIDES-THE GOOD AFTERMATHEVERY COIN HAS TWO SIDES-THE GOOD AFTERMATH

MANY GAPING LOOPHOLES IN THE MARKET WERE PLUGGED

BADLA WAS BANNED & OPERATORS COULD NOT CARRY FORWARD TRADE IN ITS PRIMITIVE FORM

TRADING CYCLE WAS NOW REDUCED FROM ONE WEEK TO A DAY

FORWARD TRADING FORMALLY INTRODUCED IN FORM OF EXCHANGE - TRADED DERIVATIVES

PAREKH FORCED LETHARGIC POLICY-MAKERS TO INSTITUTE REFORMS

BROKER CONTROL OVER STOCK EXCHANGES WAS DEMOLISHED

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SLEEPING REGULATORSSLEEPING REGULATORS

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SEBI SLEPT AS STOCK MARKET BLEDSEBI SLEPT AS STOCK MARKET BLED

NO CONTROL ON PRICE MANIPULATION

POOR RATE OF CONVICTION AND PENAL ACTION

NO DUE PROCESS OF REGULATION

BLIND EYE TOWARDS UNREALISTIC PRICE RISE OF SCRIPTS

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SEBI SLEPT AS STOCK MARKET BLEDSEBI SLEPT AS STOCK MARKET BLED

NON-IMPLEMENTATION OF DISCLOSURE NORMS

REGULATORY BIAS

INDICATION OF EXTRANEOUS PRESSURES

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WHAT WAS NOT DONE WHAT SHOULD HAVE BEEN WHAT WAS NOT DONE WHAT SHOULD HAVE BEEN DONEDONE

REGULAR INSPECTION FROM RBI

EMPOWERING SEBI

STRENGTHENING NORMS AND REGULATION

COORDINATION OF CENTRAL BANK AND SEBI

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WHAT WAS NOT DONE WHAT SHOULD HAVE BEEN WHAT WAS NOT DONE WHAT SHOULD HAVE BEEN DONEDONE

NEGLIGENCE OF SMALL COOPERATIVE BANK

ASSETS LIABILITY MANAGEMENT FOR BANK

INVESTIGATE UNUSUAL PRICE MOVEMENT OF SHARES

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THE END GAMETHE END GAME

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WHO LOST WHO ALWAYS WHO LOST WHO ALWAYS LOSSES-THE COMMON MANLOSSES-THE COMMON MAN

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HAS SOMETHING CHANGED

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WELL-NOT REALLY

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WHERE ARE WE HEADED-WHERE ARE WE HEADED-LESSONS FOR ME AND YOULESSONS FOR ME AND YOU

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LESSONS FOR YOU AND MELESSONS FOR YOU AND ME

STOCK MARKETS ARE SPECULATIVE TO SAY THE LEAST

BEGINNERS ARE BETTER OFF WITH MUTUAL FUNDS

DO NOT EXPECT MIRACULOUS RETURNS

TRACK THE COMPANY NOT THE SHARE

NEVER EVER INVEST WITH BORROWED CAPITAL

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LESSONS FOR YOU AND MELESSONS FOR YOU AND ME

DIVERSIFY

SET STOP LOSSES WHENEVER INVESTING IN STOCK MARKET

INVEST CAPITAL WHICH IS NOT IMMEDIATELY REQUIRED

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THE BEGINNING OF ANOTHER THE BEGINNING OF ANOTHER SCAM ?SCAM ?

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LAST HEARD KETAN PAREKH LAST HEARD KETAN PAREKH IS ACTIVE IN STOCK MARKET IS ACTIVE IN STOCK MARKET THROUGH MANY CONDUITSTHROUGH MANY CONDUITS

THE PIED PIPER OF STOCK MARKET WILL REMAIN WORK IN PROGRESS FOR INVESTIGATING AGENCIES

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THE SCAM CONTINUESTHE SCAM CONTINUES

Ketan Parekh Scam-by navneet bali

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