Ketan Parekh, the persistent ghoul of Dalal Street

First penalized for his role in the 1992 securities scam, he resurfaced by the turn of the millennium with a personalized version of market manipulation that eventually bore his name.

To understand Parekh, one must look at him not merely as a fraudster but as a master operator who refined the crude, blustering circular trading of the past into a high-frequency, institutionalized machinery of deception.

Born into a lineage of Mumbai stockbrokers, Parekh was groomed in the pits of the Bombay Stock Exchange. A chartered accountant by training, he began his career at NH Securities, his father’s firm, before migrating to the orbit of Harshad Mehta at GrowMore Research. Where Mehta was the Big Bull who broke the bank with sheer bravado, Parekh was the understudy, soft-spoken, discreet, and devastatingly precise.

Mehta eventually met his fate when the 1992 scam was uncovered, but if regulators believed they had closed the systemic loopholes of that era, they were mistaken. Parekh saw the episode as a blueprint for refinement.

The Successful Psychopath

This refusal to learn the correct lesson from a predecessor’s failure is a hallmark of the Successful Psychopath, a profile explored by Paul Babiak and Robert D. Hare, the leading pioneers in the study of corporate psychopathy. In their seminal book Snakes in Suits: When Psychopaths Go to Work, Babiak and Hare note that such individuals view market regulations not as moral boundaries, but as intellectual puzzles to be solved.

As the 21st century dawned, Parekh was the reigning bull of the Indian markets. He achieved this by engineering a closed-loop ecosystem of circular trading in his infamous K-10 stocks. Companies like Zee Telefilms, Himachal Futuristic Communications Ltd (HFCL), Global Telesystems, Mukta Arts, and PentaMedia Graphics became the perfect vehicles for his manipulation.

In a classic pump-and-dump operation, Parekh built massive positions, created artificial volume through circular trading, and then exited once institutional investors were lured into the trap. PentaMedia Graphics (formerly Pentafour) soared from ₹175 to ₹2,700, while Global Telesystems climbed from ₹185 to ₹3,100.

Parekh didn’t just trade stocks; he collaborated with promoters to manufacture a frenzy. A prime example was HFCL. The stock price scaled astronomical levels far beyond any fundamental valuation. This collusion eventually led to intense scrutiny of HFCL’s promoters, as the Securities and Exchange Board of India (Sebi) uncovered that funds had been provided to Parekh to rig their own scrip.

Inevitably, the music had to stop. After a 176-point market crash following the 2001 Union budget, Sebi and the Reserve Bank of India (RBI) descended on Parekh, who was eventually convicted and barred from trading. But not before he had caused serious collateral damage.

The money to fund his dubious schemes was secured through fraudulent pay orders from Madhavpura Mercantile Cooperative Bank (MMCB) and the reckless complicity of Global Trust Bank (GTB). When the bubble burst in March 2001, MMCB collapsed, and GTB was left with a gaping hole of non-performing assets. In 2004, it was merged with the Oriental Bank of Commerce (OBC), a move that saved depositors but wiped out shareholders.

While some estimates suggest the resulting market crash wiped out nearly ₹40,000 crore in investor wealth, the Joint Parliamentary Committee (JPC) later estimated the actual financial fraud—the money diverted from the banking system—at approximately ₹5,000 to ₹6,000 crore.

Lurking in the shadows

The ban, however, was never enough to deter a man like Parekh, who viewed it merely as necessitating a change in tactics. In 2009, he was found to be trading through 26 front companies, which were subsequently banned. Most recently, in January 2025, the Securities and Exchange Board of India (Sebi) unmasked Parekh’s continued presence in the shadows. An interim order detailed a multi-crore front-running scam involving non-public information from a major US-based fund. The investigation revealed that Parekh allegedly used encrypted messaging and aliases like "Jack" and "Boss" to issue trading instructions to a network of front-runners.

Parekh exists today, in that dark intersection where the institutionalized forgery of a Harshad Mehta meets the calculated decade-long deceit of a Bernie Madoff. He is the Ghost in the Machine of Dalal Street, a reminder that the Indian banking-market nexus always leaves scope for men like him to exploit the system. As he faces renewed scrutiny in 2025, it is evident that Parekh never truly left the floor. He simply moved into a deeper set of shadows.

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