In January 2025, the Securities and Exchange Board of India (Sebi) issued an interim order that sent a familiar chill through the corridors of Dalal Street. The order unmasked the continued, shadowy operations of one of India's most infamous market figures: Ketan Parekh. This revelation confirmed what many had long suspected—the man once convicted for massive financial fraud had never truly left the trading floor; he had simply retreated into deeper shadows.
From Understudy to Master Manipulator
Born into a family of Mumbai stockbrokers, Ketan Parekh was groomed in the intense environment of the Bombay Stock Exchange. A chartered accountant by training, he began his career at his father's firm, NH Securities. His real education, however, came when he migrated to the orbit of Harshad Mehta at GrowMore Research during the heady days of the early 1990s.
Where Mehta was the flamboyant "Big Bull," Parekh was his discreet and precise understudy. When the 1992 securities scam was uncovered and Mehta faced his downfall, regulators may have believed they had plugged systemic loopholes. Parekh, however, saw the episode not as a deterrent but as a blueprint for refinement. He viewed market regulations not as moral boundaries but as intellectual puzzles to be solved, a trait psychologists associate with the "Successful Psychopath" profile.
By the turn of the millennium, Parekh had become the reigning bull. He engineered a sophisticated, closed-loop ecosystem of circular trading focused on a group of stocks that became infamous as the "K-10 stocks." This list included companies like Zee Telefilms, Himachal Futuristic Communications Ltd (HFCL), Global Telesystems, Mukta Arts, and PentaMedia Graphics.
The Mechanics of a Man-Made Frenzy
Parekh's strategy was a classic yet refined pump-and-dump scheme. He would build massive positions in these select stocks and then create artificial trading volume and price momentum through circular trading among his connected entities. This manufactured frenzy lured unsuspecting institutional and retail investors into the trap. Once the prices were inflated to astronomical levels, Parekh and his network would exit, leaving others holding the bag.
The numbers were staggering. PentaMedia Graphics (formerly Pentafour) soared from around ₹175 to ₹2,700. Global Telesystems climbed from ₹185 to ₹3,100. His manipulation was not a solo act; it involved active collusion with company promoters. In the case of HFCL, Sebi later uncovered that the company's promoters had provided funds to Parekh to rig their own company's stock price.
The scheme was funded by a dangerous nexus with cooperative and private banks. Parekh secured massive amounts of money through fraudulent pay orders from Madhavpura Mercantile Cooperative Bank (MMCB) and with the complicity of Global Trust Bank (GTB).
The Bursting Bubble and Lasting Damage
The music finally stopped in March 2001, following a 176-point market crash after the Union Budget. Sebi and the Reserve Bank of India (RBI) descended on Parekh's operations. The collateral damage was severe. MMCB collapsed, and GTB was left with a gaping hole of non-performing assets, leading to its forced merger with Oriental Bank of Commerce (OBC) in 2004.
While a Joint Parliamentary Committee (JPC) estimated the core financial fraud—the money diverted from the banking system—at ₹5,000 to ₹6,000 crore, the total erosion of investor wealth was far greater, with some estimates nearing ₹40,000 crore. Parekh was eventually convicted, barred from trading, and served time. But for a mind like his, a ban was merely an obstacle requiring new tactics.
The 2025 Revelation: A Ghost in the Machine
The Sebi order of January 2025 proved his persistence. The regulator detailed a multi-crore front-running scam where non-public information from a major US-based fund was allegedly exploited. Parekh, operating through aliases like "Jack" and "Boss," used encrypted messaging to issue trading instructions to a network of front-runners via 26 front companies.
This latest chapter places Ketan Parekh at a dark intersection in financial history. He combines the institutional audacity of a Harshad Mehta with the calculated, long-term deceit of a Bernie Madoff. He is the Ghost in the Machine of Dalal Street, a persistent reminder of the vulnerabilities that exist within the complex nexus of Indian markets and banking. As fresh scrutiny falls upon him in 2025, his story remains a stark lesson: systems are only as strong as their most determined exploiter, and some specters are very hard to exorcise.
