40,000 Crore Scam That Never Existed!!
We’ve all heard stories about the infamous stock market scams and seen many movies and series based on them. Some watch them for entertainment, some watch them for gaining more insight, and some like me watch them for research purposes. As a finance student and stock market enthusiast, I was very intrigued by knowing how a very common man like Harshad Mehta became the stock market king. As my research progressed, I also came across the details of the 2001 stock market scam.
The articles that led me to start my research mentioned very odd statements which I am not sure why nobody noticed, most importantly How a 1000 CR Scam was publicized as a 40,000 CR Scam? I am going to cover all the shocking details in my article, so keep reading till the end.
What was the Ketan Parekh Stock Market Scam?
Ketan Parekh was a firm believer in the ICE industry (Information, Communication, and Entertainment) during the dot-com boom years of 1999 and 2000. This enabled him to show many more investors that his estimates were accurate. Various investment firms, foreign corporations, banks, and entrepreneurs entrusted him with their money while Ketan Parekh commanded the stock market from 1999-2000.
Because there were no basic rules and regulations, Ketan Parekh traded on the Kolkata stock exchange. He also hired numerous additional brokers to trade on his behalf and pay the commission. With these large quantities of money, he would buy a 20-30% stake in some lesser-known companies, causing their share prices to skyrocket and making them the talk of the town overnight. He would sell the shares once the price hit a specified level, reaping huge profits.
He began by acquiring Madhavpura Mercantile Commercial Bank shares to gain the bank’s trust when he sought a loan in the form of Pay Orders. At that time, the Reserve Bank of India allowed merchants to obtain a credit of about 15 crores. He pursued other financial institutions, such as UTI, to guarantee pay orders, which included their investments in HFCL, after successfully ripping off the price of MMCB’s shares.