Ketan Parekh purchased small stakes in less known small
market capitalization companies, and jacked up their prices through
circular trading with other traders, and collusion with these companies and large institutional investors. This resulted in steep hikes in share prices (for example: shares of
Zee telefilms zoomed up from Rs 127 to a price of Rs 10,000. This set of ten stocks was colloquially referred to as "K-10" stocks and Parekh was playfully referred to as "Pentafour Bull". On 1 March 2001, just after the Indian Union Budget had been presented, the
BSE Sensex crashed 176 points, prompting the then NDA government to set up an inquiry into the market reaction. Subsequently the
RBI refused to clear pay orders (POs) that had been given by Parekh as collateral for loans to BOI (
Bank of India), as they found them to be suspicious. The RBI commenced an investigation against Parekh. Around the same time, a bear cartel of brokers in Mumbai opposed to Parekh tried to dump their shares of K-10 stocks. Panicking, Parekh sold off his entire ownership of the so called K-10 stocks that he had successfully jacked up over the past two years, especially those of two entities - GTB bank and MMCB bank. He carried out this large scale dump in the evening, after regular trading hours, from 5 PM to midnight at the
Calcutta Stock Exchange. This resulted in a stock market crash the next day, resulting in large scale losses for large institutional investors, including insurance companies and mutual funds. A 30 member
Joint Parliamentary Committee (JPC) investigation ensued which found that Parekh had been involved in
circular trading throughout the time period from and with a variety of companies, including
Global Trust Bank (GTB) and
Madhavpura Mercantile Cooperative Bank (MMCB). The JPC found him to have played a major role in rigging the prices of a set of ten Indian companies, from 1995 up to 2001. This resulted in Parekh's first conviction, which carried a one-year sentence, coming as a result of a transaction he conducted involving a unit of
Canara Bank in 1992. Though Parekh was subsequently barred from stock trading, the
Securities and Exchange Board of India alleged in 2009 that a variety of companies and other actors were trading on behalf of Parekh. An investigation ensued and 26 entities were banned from trading as a result of that investigation. ==2025 scam==