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Contents:
Introduction Mechanism of scam Impact of scam SEBI Measures Conclusion
Introduction
Mechanism of SCAM
Ketan Parekh, a qualified CA, and a stock broker, identified a number of stocks (popularly called the K10), and took up huge positions in these. 10), these. He used a large number of Benami accounts and smaller stock exchanges, such as the Kolkata and Ahmedabad stocks He borrowed heavily from banks such as Global trust Bank and Madhavpura Mercantile Cooperative Bank. Bank. When the price was high enough, he pledged the shares with banks as collateral for funds. funds.
Cont..
It was alleged that MMCB issued funds to KP without proper collateral security and even crossed its capital market exposure limits As per a RBI inspection report, MMCBs loans to stock markets were around Rs. 10 billion of which over Rs. 8 Rs. Rs. billion were lend to KP and his firms KP reportedly used his BOI accounts to discount 248 pay orders worth about Rs. 24 billion between January and Rs. March 2001 BOIs losses eventually amounted to well above Rs. 1.2 Rs. billion
The MMCB pay order issue hit several public sector banks very hard
K 10 Stocks
Aftek Infosys DSQ Software Global Telesystems Himachal Futuristic Communications Pentamedia Graphics Satyam Computers Silverline Technologies SSI Zee Telefilms Pritish Nandy Communications
Impact of scam
The payment crisis broke out in the Calcutta Stock Exchange (CSE)
SEBI Measures
SEBI first realized after 1992 scam. Has been given considerably more powers since then. Set up the Department of Supervision. Advisory Board on Banking, Commercial and Financial Frauds (ABBCFF) came into picture.
A high level committee comprising of RBI Governor, SEBI Chairman, Finance Secretary was created. A Serious Frauds Office was set up under the Department of Company Affairs (DCA). SEBI banned 26 entities from trading into market.
Conclusion
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