Sebi says Ketan Parekh still active in mkt, bars 26 firms

Market regulator Securities Exchange Board of India (Sebi) has found that banned stock broker Ketan Parekh is still active in the stock markets and has restrained 26 entities connected to Parekh from trading. CNBC-TV18's Sajeet Manghat reports.

Sebi has confirmed something that was long doing the rounds in the stock market - that Ketan Parekh is still active. It has unearthed evidence that the stock broker, who was banned from the stock markets for the 2000 scam and famously referred to as KP, is active through clients.

Ketan Parekh, Sebi said, has been routing funds through 26 entities and thorough layers of transaction, has routed his funds in the securities market. "It appears that he (Ketan Parekh) has conveniently used the connected clients at will as its front entities for executing trades desired by him in the securities market," Sebi said in its order.

The fact came into light after the Income Tax department came out with some observations from sources by which KP paid a loan to one of the entities, amounting to nearly Rs 26 crore. Sebi carried out an investigation in nine scrips, including CAL Refineries, Temptation Foods, Bang Overseas etc and found that he acted in the market through connected entities of clients. Many transactions took place via market deals while some others were via off-market deals, and this was something that surprised the the regulator.

In many cases, the Income Tax department observed that an interest-free loan amount would be passed on to the connected clients without any agreements, which would then be invested in the securities.

Sebi also found that the transactions would happen through a layer of investments by clients and there would be an integration of these funds at the banking system.

The regulator is investigating the transactions and has also said it wants its Enforcement Directorate to investigate the tail of funds that has happened in the transactions.