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Introduction
Ketan Parekh is a former stock broker from Mumbai, India
cont.
KP took advantage of low liquidity in certain stocks which later came to be known as K-10 Stocks.
K-10 stock
Aftek Infosys DSQ software
Global telesystems
HFCL Satyam computer Sterlite Indusries Zee Telefilms Silverline Technology Pentamedia Graphics and Pritish Nandy Communications
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Purchase share in the name of poor people living in the shanty towns of Mumbai
Rs 250 crore loan from Global Trust Bank, though Global Trusts Chairman Ramesh Gelli
Rs 1,000 crore from the Madhavpura Mercantile Co-operative Bank IDBI Bank and IFCI had extended loans of Rs 1,400-odd crore to companies known to be close to Ketan Parekh KP borrowed money from various companies like HFCL and banks
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Modus Operandi
Immediate action by SEBI BSE President Anand Rathi's (Rathi) resignation added to the downfall The scam shook the investor's confidence By the end of March 2001
At least eight people committed suicide Hundreds of investors were driven to the brink of bankruptcy
Implications
BOI complains to CBI-KP is arrested Global Trust Bank and Bank of India 's merger failure SBI , PNB & BOI loss was minimal. So it did nothing MMTC bank licence cancelled KP paid its stockholders Rs.400 Crores.
Badla system was banned Options and Index Future derivatives was introduced 10% additional deposit Margins. SEBI allowed banks for collateralised lending only through BSE and NSE
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CONCLUSION
RS. 2000 billion lost market capital KP released on bail on May 2001 All Ketan Parekh had to say was I made mistakes The Retail investors were the worst hit SBI, BOI, PNB had to suffer huge losses
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