On Tuesday, rogue stockbroker Ketan Parekh, and his associate Hiten Dalal, were sentenced to a year in jail by special court. Neither of them will have to spend a night behind bars as they were immediately granted bail in the case in which Parekh was found guilty of conspiring to siphon off Rs 47 crore in 1992 from Bangalore-based Canbank Financial Services.
Justice VM Kanade stayed the order till July 31 to allow the convicts to appeal in the Supreme Court.
Parkeh’s name surfaced in the scam in 1993, and he proceeded to gain notoriety in several stock manipulation cases. Indeed, Justice Kanade told Parekh’s lawyer Mahesh Jethmalani: “Had Parekh been convicted and jailed earlier, he would not have committed other offences.”
According to the CBI, Parekh and his associates purchased government securities for Canbank Financial Services (better known as Canfina) worth Rs 47.5 crore. They then transferred the money from Canfina to their personal bank accounts and used it for trading in the stock market. The money was eventually returned to Canfina.
Parekh would raise funds by offering shares as collateral to banks. It worked when prices rose, but blew up in his face when markets crashed in March 2000. The crash eroded the value of Parekh’s stocks, which he had artificially jacked up. He was asked to either pledge more shares as collateral or return some of the borrowed money. By April 2000, mutual funds substantially reduced their exposure in the so-called ‘K-10’ stocks, shares Parekh favoured. In the next two months K-10 stocks plummeted 67 per cent.
Coming from a middle-class family, Parekh’s low-key lifestyle served to disguise his dealings.