The Ketan Parekh Scam

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The Man who Trigerred the Crash

KP was a chartered accountant by profession and used to manage a family business, NH Securities started by his father.

Known for maintaining a low profile, KP's only dubious claim to fame was in 1992, when he was accused in the stock exchange scam.5 He was known as the 'Bombay Bull' and had connections with movie stars, politicians and even leading international entrepreneurs like Australian media tycoon Kerry Packer, who partnered KP in KPV Ventures, a $250 million venture capital fund that invested mainly in new economy companies. Over the years, KP built a network of companies, mainly in Mumbai, involved in stock market operations.

The rise of ICE (Information, Communications, and Entertainment) stocks all over the world in early 1999 led to a rise of the Indian stock markets as well.

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5] When the interest rates were freed in mid-1989, it made the price of both bonds and money more volatile, and increased the link between the securities and money markets. With price volatility and increased volumes, securities broking became a profitable activity. The rising volumes were funded by banks through bank receipts (BR is a document issued by a bank acknowledging that it has sold certain government securities to a party and received payment). The scam came to light when RBI asked the SBI to show the bank receipts, and it was found that Rs 6.22 billion not been reconciled and was untraceable. The money involved in the scam was eventually ascertained to be well over Rs 30 billion.

6] The e-commerce revolution had led to a massive upsurge in the value of technology stocks across the globe, especially Internet ventures. This came to be known as the dotcom boom.

7] A bull run is an uptrend in the stock markets caused by the rise in the price of shares, sustained by buying pressure of actual investors or news of favorable economic growth, decontrol and political developments.

8] The National Association of Securities Dealers Automated Quotation System (NASDAQ) is a US-based stock exchange, which comprises largely of technology stocks. Started in 1971, NASDAQ is the first screen-based, floor less trading system and the second largest stock market in the US.