This document summarizes the Ketan Parekh scam, a major corporate fraud that occurred in India in the late 1990s and early 2000s. The scam was perpetrated by stockbroker Ketan Parekh, who took advantage of low liquidity in certain stocks to artificially inflate their prices. This caused other investors to invest heavily in these "K-10 stocks." When the scam was revealed in 2001, it triggered a major crash in the stock market that shook investor confidence in India. In the aftermath, SEBI launched investigations and Parekh was arrested for fraudulently obtaining $20 million from Bank of India. The scam exposed regulatory lapses and highlighted the need for reforms to protect small investors.

1. Presented By :
Shilpi Agarwal

2. Introduction on
Corporate Frauds OR
White Collar Crimes
White Collar Frauds refers
to financially motivated non-
violent crime committed by
business and government
professionals.
Fraud is a worldwide
phenomenon that affects all
contiments and all sectors of
the economy.
According to ACFE, Fraud
is “A deception or
misrepresentation that an
individual or entity makes
knowing that
misrepresentation could
result in some unauthorised
benefit to the individual or to
the entity or some other
party.”
There are many types of
Frauds, including the following
common frauds:
 Theft of cash
 Misuse of acconts
 Bribery and corruption
 Financial accounting mis-statements.

3. Objectives of the Study

4. National – International
Comparison
On the basis of types of Frauds
held in Indian & Global Companies
On the basis of Frauds committed
by internal & external factors of
Companies

5. THE KETAN
PAREKH SCAM  A Mumbai based stock broker
chartered accountant by profession
 KP took advantage of low liquidity
in certain stocks which later came
to be known as ‘K-10’ Stocks
 Held significant stakes in the K-10
companies
 The buoyant stock markets from
January to July 1999 helped the
K-10 stocks increase in value
substantially
 As a result other brokers and fund
mangers started investing heavily
in these stocks

6. THE K-10
STOCKS
Aftek
Infosys
DSQ software
Global telesystems
Himachal Futuristic
Communications
Pentamedia Graphics
Satyam computers
SSI
Zee Telefilms
Pritish Nandy
Communications
All my lifetime's savings are gone. I
don't know how to feed my
family."
- A small investor hit by the Ketan
Parekh scam, in April 2001.

7. Impact on Stock Market
2001: The Market fell by 28% in 2 months
(Feb – Apr) as the Scam came into light.

8. The Crash that Shook the Nation
 176 points fall in the sensex on
march 1st
, 2001.
 Prior day union budget tabled
prompted 177 sensex points
increase.
 SEBI launched immediate
investigations.
 SEBI inspected the books of
several brokers suspected of
triggering the crash.
 RBI ordered some banks to
furnish data of Capital market
exposure.
 BSE President Anand Rathi’s
resignation added to continued
downfall of sensex.
 Opened debate over banks
financial capital market
operations, Lending funds
against collateral security, Dual
control of co-operative banks
 Ketan Parekh was arrested by
CBI on 30th
March 2001. He
was charged befrauding Bank
of India by almost $20 Million
 Another sensex fall of 147
Points

9. Working of BADLA System
A Fund Mechanism

10. Factors that helped the
man

11. SEBI’s
role
after
the
scam

12. Conclusions