Who is protecting Ketan Parekh?

Au00a0set of invisible abettors helped Parekh manipulate the stocks of key companies this year, says lawyer YP Singh

Criminal lawyer Y P Singh has urged the Central Bureau of Investigation (CBI) to find out about Ketan Parekh (KP's) invisible abettors who helped him manipulate the stock prices of key companies in this year's bull run.



Echoing a view held by many observers, Singh maintains that Parekh could not have pulled off an operation of this magnitude without the backing and protection of senior officials in the government and in investigating agencies.

"There seems to be an invisible support system behind Parekh.

The premier investigation agency should enforce accountability and profoundly probe the circumstances which enabled him to manipulate stocks by using fronts," Singh, also a former IPS official, told MiD DAY.

Slippery fish?

Not only was the police department unable to keep a watch on KP's movements, regulating body Securities and Exchange Board of India was also caught on the wrong foot after share prices were allegedly artificially inflated by a cartel led by him.

A detailed Intelligence Bureau (IB) report has thrown light on how dozens of stockbrokers jacked up share prices to sell them to fund managers (see box).
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At least 18 brokers and dozens of listed companies have come under the scanner for manipulating stock prices.

The report, now with this newspaper, pegs the value of the dealings at a few hundred crores.

Lapses

Singh feels the agencies should have kept an eye on KP. "The agencies should have kept KP under special watch.

That way, the scam could have been detected at a very early stage without investors losing money in the manipulated market," he said.


Ketan Parekh and his coterie of operators allegedly manipulated the initial share issue of many companies

Enforcement agencies, however, have problems keeping tabs on players like KP and his army of fronts. In most cases, the scams are over Rs 50 lakh and the local police has to transfer the case to the Economic Offences Wing (EOW).

"The EOW, though empowered to deal with such cases, has very little information on dabba or internal trading and their sleuths lack expertise in such cases," said a senior police official, on condition of anonymity.

A case related to manipulation of shares usually takes three to four years to come to a close. This often gives the share broker enough time to get close to the senior officer investigating the case.

The notesheet related to the case, which is prepared by a junior officer, is reviewed by the superintendent and deputy inspector general of police. In most cases he gets a 'go slow' signal an indication to look the other way.

Underworld too
Defaulting stockbrokers usually deal with a lot of liquid cash, which attracts the attention of underworld gangs. They then seek the connivance of key police officers, for which a sizable percentage is paid.

"In big scam cases, ministers are offered shares for their protection when a project is launched. The minister returns the shares for cash soon after the project takes off," the official added.

Huge chunks of stock from such deals are offloaded into the market to make quick money. The minister usually shields the market manipulators, he said.

The Other Side
CBI officials said they are yet to stumble upon any government or law enforcement official's involvement in the LIC Housing Finance scam for price rigging and market manipulation. "Investigations are on," remarked a DIG, who did not wish to be named.
Ketan Parekh was not available for comments and did not respond to repeated text messages.

IPOu00a0scam
KP and his coterie of operators allegedly manipulated the initial share issue of many companies. Cartel members would secure 50 per cent of IPO proceeds from promoters of unknown and fringe proceeds after their listings.
The modus operandi of the cartel was to push the share prices of these companies to a new high and then unload the shares to fund managers.