#nse scam

[jjtax]

Unveiling the Ketan Parekh Scandal: A Deep Dive into India’s 2001 Stock Market Crisis

We're back, but today's post is a bit different. We're taking a deep dive into the infamous stock market fraud of early 2001 in India: the Ketan Parekh scandal. This massive financial deception, masterminded by stockbroker Ketan Parekh, caused major upheaval in the financial markets and highlighted critical flaws in regulatory oversight, leaving a lasting impact on India's financial landscape.

How the Scam Was Executed

Ketan Parekh, once a well-regarded stockbroker and trader, orchestrated the scam using a complex scheme to manipulate stock prices and deceive investors. His methods, which initially earned him acclaim, involved:

Circular Trading: Parekh used a tactic known as circular trading, where stocks were repeatedly bought and sold among a limited group of firms and brokers to artificially boost their prices. This created a false sense of high demand, leading to inflated stock prices and luring unsuspecting investors.

Hawala Transactions: To avoid detection, Parekh utilized hawala systems—informal networks for transferring money that bypass traditional banking systems. This allowed him to move large amounts of money without creating a paper trail, complicating efforts to track and investigate his fraudulent activities.

Stock Overvaluation: Parekh’s scam also involved inflating the values of stocks, especially those in which he had substantial interests. By raising these stock prices artificially, he was able to sell them at much higher rates, profiting greatly at the expense of genuine investors.

The Collapse of the Scam

The scheme began to collapse in early 2001 as the stock market experienced an abrupt downturn. Investigations revealed significant anomalies and irregularities linked to Parekh’s manipulation:

Unusual Trading Activity: Analysts and market observers detected trading patterns and price shifts that diverged significantly from the economic realities of the companies involved. This triggered an investigation by regulatory authorities.

Regulatory Response: The Securities and Exchange Board of India (SEBI) played a crucial role in exposing the scam. SEBI's probe uncovered Parekh’s use of circular trading and other deceitful practices, leading to a broader investigation into his and his associates' activities.

Financial Consequences: The immediate fallout included a sharp decline in stock market indices, causing substantial financial losses for investors. Both the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE) saw significant drops, reflecting a loss of market confidence.

Quantitative Data and Repercussions

The financial repercussions of the Ketan Parekh scandal were severe. Key figures include:

Market Capitalization Decline: The Indian stock market’s market capitalization fell by over ₹10,000 crore (about $2.5 billion) due to the scam. This drop resulted from the sudden erosion of investor trust and a subsequent mass sell-off.

Stock Price Manipulation: Parekh manipulated over 30 companies, with some stock prices skyrocketing by up to 400% in a brief period. For instance, the price of a stock from one of Parekh’s favored companies surged from ₹25 to ₹125 before plummeting back down.

Legal and Regulatory Expenses: Addressing the scandal incurred significant legal and regulatory costs. SEBI and other authorities invested considerable resources in investigating the fraud and enforcing corrective measures. Several brokers and market participants faced fines and legal repercussions.

Impact and Reforms

The Ketan Parekh scandal had far-reaching effects on India's financial sector. In response, several reforms were implemented to enhance market transparency and regulatory oversight:

Regulatory Strengthening: SEBI enacted stricter rules to curb market manipulation and improve transparency. This included tougher disclosure requirements for companies and more stringent trading regulations.

Enhanced Surveillance: Indian stock exchanges upgraded their surveillance systems to better detect and prevent fraudulent trading activities, incorporating advanced monitoring technologies and data analysis.

Legal Outcomes: Ketan Parekh faced legal consequences and was ultimately convicted for his role in the scam. He received a prison sentence and fines, serving as a warning against future financial misconduct.

The Ketan Parekh stock market scandal of 2001 remains a landmark event in India's financial history. Through circular trading, hawala transactions, and stock overvaluation, Parekh executed a scheme that not only misled investors but also exposed vulnerabilities in the financial system. The aftermath led to significant reforms and regulatory changes aimed at preventing such incidents in the future. As both investors and regulators continue to navigate the complexities of financial markets, the lessons from the Ketan Parekh scandal emphasize the need for vigilance, transparency, and robust oversight to maintain market integrity.

JJ Tax

[ias-next-lucknow]

Securities and Exchange Board of India (SEBI)

The Securities and Exchange Board of India (SEBI) recently unveiled a new logo on the occasion of its 35th anniversary.

About SEBI

SEBI has been successful in its functions:

Function: Example of SEBI’s success

Protection of investors’ interests: SEBI has taken action against fraudulent collective investment schemes  to protect investors’ interests e.g., Action against the Sahara group (2013)

Impressive rise: Assets under the management of mutual funds, the total number of dematerialized accounts, dematerialized turnover, the number of derivatives contracts, etc, have all grown exponentially.

The smooth functioning of the securities market: SEBI has introduced online trading platforms and electronic clearing services

Regulation of securities market operations:  SEBI has introduced regulations for insider trading, delisting of securities, and disclosure and investor protection guidelines

Education of investors: SEBI‘s ‘Jan Jagruti Abhiyaan’ to educate investors about the securities market and their rights as investors.

Prohibition of fraudulent and unfair trade practices: SEBI has taken action against market manipulations and price rigging. In 2015, SEBI ordered a probe into suspected rigging of the National Stock Exchange’s (NSE) algo-trading systems and imposed a penalty of Rs 1,000 crore on NSE for its role in the co-location case.

Ensuring compliance by market participants: In 2018, SEBI fined ICICI Bank and its CEO Chanda Kochhar for violating disclosure norms related to a loan given to Videocon Group.

Tackling insider trading: In 2017, SEBI imposed a penalty on Reliance Industries for alleged insider trading in Reliance Petroleum shares in 2007.

Limitations of SEBI

SEBI has certain limitations in terms of its reach, enforcement powers, coordination with other regulatory bodies, resources, and keeping up with changing market dynamics. These limitations can create regulatory gaps and overlaps, leading to delays in the resolution of cases.

Examples

SEBI’s alleged inaction in the Ketan Parekh scam and Satyam scandal

SEBI’s inability to prevent the NSEL scam

Failure of SEBI’s regulations to prevent the misuse of participatory notes (P-notes) by foreign investors

Conclusion:

There is a need for continuous monitoring and improving market intelligence to strengthen enforcement. Also, India’s financial markets are still segmented, and a unified financial regulator may be required to remove overlaps and excluded boundaries.

Read more: https://iasnext.com/securities-and-exchange-board-of-india-sebi-upsc-current-affairs/

[squarwell-breakingnews]

Delhi HC grants bail to Chitra Ramkrishna, Anand Subramanian in NSE co-location case - Times of India

Delhi HC grants bail to Chitra Ramkrishna, Anand Subramanian in NSE co-location case – Times of India

NEW DELHI: The Delhi High Court on Wednesday granted bail to former National Stock Exchange (NSE) head Chitra Ramkrishna and ex group operating officer Anand Subramanian in the co-location scam case being probed by the CBI. Justice Sudhir Kumar Jain said he was granting “statutory bail” to the two former officials of the NSE. A detailed copy of the order is awaited. An FIR was registered in the…

[znewstech]

Delhi HC grants bail to Chitra Ramkrishna, Anand Subramanian in NSE co-location case

Delhi HC grants bail to Chitra Ramkrishna, Anand Subramanian in NSE co-location case

NEW DELHI: The Delhi High Court on Wednesday granted bail to former National Stock Exchange (NSE) head Chitra Ramkrishna and ex group operating officer Anand Subramanian in the co-location scam case being probed by the CBI. Justice Sudhir Kumar Jain said he was granting “statutory bail” to the two former officials of the NSE. A detailed copy of the order is awaited. An FIR was registered in the…

[theechudar]

Delhi HC grants bail to Chitra Ramkrishna, Anand Subramanian in NSE co-location case

Delhi HC grants bail to Chitra Ramkrishna, Anand Subramanian in NSE co-location case

Last Updated: September 28, 2022, 12:03 IST The Delhi High Court on Wednesday granted bail to former National Stock Exchange (NSE) head Chitra Ramkrishna and ex group operating officer Anand Subramanian in the co-location scam case being probed by the CBI. Justice Sudhir Kumar Jain said he was granting “statutory bail” to the two former officials of the NSE. A detailed copy of the order is…

[planify]

Check out the video on #NSEColocationScam.#Sanjay Gupta was detained for the NSE co-location scam by the #CBI. Watch all the latest updates on Planify.

[gujjukathiyawadi]

NSE Scam: एनएसई घोटाले में 'हिमालय का योगी' गिरफ्तार! चित्रा रामकृष्ण लेती थी उनसे सलाह

NSE Scam: एनएसई घोटाले में ‘हिमालय का योगी’ गिरफ्तार! चित्रा रामकृष्ण लेती थी उनसे सलाह

हाइलाइट्स NSE घोटाले में आनंद सुब्रमण्यम को सीबीआई ने गिरफ्तार किया एनएसई की पूर्व सीईओ चित्रा रामकृष्ण के चीफ स्ट्रेटजिक ऑफिसर थे संदेह है कि हिमालय का योगी कोई और नहीं बल्कि सुब्रमण्यम ही हैं   नई दिल्ली: सीबीआई ने नैशनल स्टॉक एक्सचेंज (NSE) में कथित अनियमितताओं के मामले में आनंद सुब्रमण्यम को गिरफ्तार कर लिया है। वह एनएसई की पूर्व सीईओ और एमडी चित्रा रामकृष्ण (Chitra Ramkrishna) के चीफ…

[newsupdatesbykiara]

Ukraine crisis: Crude oil surge a challenge to financial stability, says FM

Union Finance Minister Nirmala Sitharaman on Tuesday said rising crude oil prices amid escalating Ukraine-Russia tensions posed a challenge to India’s financial stability and the government was monitoring the situation.

“Even at the Financial Stability and Development Council (meeting) today (Tuesday), (we looked) at the challenges that posed a threat to financial stability, crude (oil) was one of the things. The international situation is worrisome where we voiced that we want a diplomatic solution for the situation that is developing in Ukraine.”

“Crude (is) one of the most important considerations ... we will keep a watch,” she said while interacting with the media.

When asked about any decision to cut taxes on fuel, she said a day prior to Deepawali the prime minister had announced a cut. Brent crude prices shot up to $99.1/barrel from $96/barrel on Monday after the Russia-Ukraine crisis deepened, but it fell to $97.86.

ALSO READ: Keen to fill vacant posts at regulatory bodies at the earliest: Sitharaman

NSE CONTROVERSY

Sitharaman said the government was looking into the controversy around former National Stock Exchange managing director (MD) and chief executive officer (CEO) Chitra Ramkrishna.

She said she’d get to the “bottom of what is available” to take a view if the sector regulator had done enough in terms of penalising the stock exchange.

[intelligentindia-blog]

How a faceless ‘Yogi’ took ‘control’ of the life & office of NSE CEO & MD Chitra Ramakrishna…

Who could he be, what’s CBI looking for…

This story is epic. A former MD and CEO of NSE, one of the world’s biggest exchanges, was sharing confidential data and taking advice on sensitive business issues from a yogi up in the Himalayas. Via email! A SEBI probe has revealed the tip of this iceberg. Now what?

And the Indian Express takes the story ahead. You will find the email ID of the yogi in the Himalayas here. Some techie should check out where exactly the mails came from.

And now Mint reports EY had conducted a forensic audit confirming that the yogi up in the Himalayas sending her emails was none other than her own COO, Anand Subramanian who reported to her. And he was allowed to just resign and go. This is how India’s biggest exchange operates.

And now edit page of Times of India, the story gets key position:

The CBI on Friday questioned former CEO of National Stock Exchange #ChitraRamkrishna in view of fresh facts emerging in connection with its ongoing probe into the alleged abuse of co-location facility in the NSE, officials said.

CBI questioning former NSE CEO Chitra Ramkrishna at her house in Mumbai. The CBI also issued look out circulars against her along with Ravi Narain and Anand Subramanian, preventing them from leaving the country.

SEBI's investigation into NSE has exposed major governance lapses, including a blatant money making scheme run by Former NSE MD & CEO Chitra Ramkrishna & her Advisor Anand Subramanian. The NSE board kept this under wraps.

#NSEscam

[solankimeera71]

Chitra Ramkrishna, Subramanian ran money making scheme, alleges Sebi

Former NSE MD &CEO Chitra Ramkrishna and Group Operating Officer and her Advisor Anand Subramanian ran a money-making scheme during their stint at the National Stock Exchange (NSE), market regulator Securities and Exchange Board of India (Sebi) has alleged.

The order passed by Sebi dated February 11 highlights frequent increase in Subramanian's compensation package without proper appraisal, documentation or file notings and with no involvement of the Human Resource (HR) head or the Nomination and Remuneration Committee (NRC). Furthermore, the order talks about Subramanian being directed to “withdraw and surrender” to the unknown person a gross amount per month as “gratitude.” Read Full Article Here

[trustednewstribune]

NSE Scam Case: Probe Agency CBI Carries Out Multi-City Search Operations

The central probe agency has filed a charge-sheet against former National Stock Exchange (NSE) CEO and MD Chitra Ramkrishna and group operating officer Anand Subramanian in the case, the officials said.

The Central Bureau of Investigation or CBI launched a coordinated search operation at over 10 locations in multiple cities today in connection with the NSE co-location scam case, officials said.

The search operation will cover brokers at more than 12 premises in Mumbai, Gandhinagar, Delhi, Noida, Gurugram and Kolkata, among other cities, they added.

The central probe agency has filed a charge-sheet against former National Stock Exchange (NSE) CEO and MD Chitra Ramkrishna and group operating officer Anand Subramanian in the case, the officials said.

The probe has so far established that from 2010 to 2015, when Ms Ramkrishna was managing the affairs of the NSE, OPG Securities, one of the accused in the FIR, had connected to the secondary POP server on 670 trading days in the “Futures and Options” segment.

The CBI has kept the probe open into allegations of preferential access granted to certain brokers by NSE officials and undue gains made out of it during the tenure of Ms Ramkrishna and Mr Subramanian.

Ms Ramkrishna, who succeeded former CEO Ravi Narain in 2013, had appointed Mr Subramanian as her adviser, who was later elevated as the group operating officer (GOO) at a fat pay cheque of ₹ 4.21 crore annually, the officials said.

Mr Subramanian’s controversial appointment and subsequent elevation, besides crucial decisions, were guided by an unidentified person, who Ms Ramkrishna claimed was a formless mysterious “yogi” (mystic) dwelling in the Himalayas, a probe into her e-mail exchanges during a SEBI-ordered audit had shown.

The central probe agency had booked stock broker Sanjay Gupta, the owner and promoter of Delhi-based OPG Securities Private Limited, in 2018 for allegedly making gains by getting early access to the stock market trading system, the officials said.

The agency is also probing unidentified officials of the Securities and Exchange Board of India (SEBI), NSE, Mumbai and other unidentified people.

“It was alleged that the owner and promoter of the said private company abused the server architecture of the NSE in a conspiracy with unidentified officials of the NSE.

“It was also alleged that unidentified officials of NSE, Mumbai had provided unfair access to the said company using the co-location facility during the period 2010–2012 that enabled it to log in first to the exchange server of the stock exchange that helped to get the data before any other broker in the market,” the CBI has alleged in the FIR.

[bharatlivenewsmedia]

NSE co-location scam: CBI raids at multiple locations

NSE co-location scam: CBI raids at multiple locations

NSE co-location scam: CBI raids at multiple locations The CBI on Saturday launched a search operation at over ten locations in connection with the National Stock Exchange (NSE) co-location scam involving the financial institution`s former MD and CEO Chitra Ramkrishna and the ex-Group Operating Officer Anand Subramanian. According to a source, the raids, which started this morning, were underway…

[news-trust-india]

NSE Co Location Scam: चित्रा रामकृष्णन से जुड़े NSE केस में CBI की बड़ी कार्रवाई

NSE Co Location Scam: चित्रा रामकृष्णन से जुड़े NSE केस में CBI की बड़ी कार्रवाई

नई दिल्ली: NSE Co Location Scam। सीबीआइ (CBI) नेशनल स्टाक एक्सचेंज (एनएसइ) को-लोकेशन मामले में मनी लांड्रिंग की जांच के तहत आज कई स्थानों पर छापेमारी की है। एजेंसी ने दिल्ली, मुंबई, कोलकाता, गांधीनगर, नोएडा और गुरुग्राम सहित 10 से अधिक स्थानों पर तलाशी ली है। सूत्रों के अनुसार सीबीआइ अपनी कार्रवाई के तहत मामले से जुड़े कुछ ब्रोकरों के ठिकाने पर यह तलाशी ले रही है। CM dhami in Haridwar:…

[maqsoodyamani]

این ایس ای گھوٹالہ: چترا رام کرشن 7 دن کیلئے سی بی آئی کی حراست میں

این ایس ای گھوٹالہ: چترا رام کرشن 7 دن کیلئے سی بی آئی کی حراست میں

این ایس ای گھوٹالہ: چترا رام کرشن 7 دن کیلئے سی بی آئی کی حراست میں   نئی دہلی،7مارچ ( آئی این ایس انڈیا )   نیشنل اسٹاک ایکسچینج کے سابق سربراہ چترا رام کرشنا کو 7 دن تک کی سی بی آئی حراست میں بھیج دیا گیا ہے۔ این ایس ای کے سابق سربراہ چترا رام کرشن کو اتوار کی رات گرفتار کیا گیا تھا۔ ان پر ملک کے سب سے بڑے اسٹاک ایکسچینج میں گڑبڑ کرنے اور ہمالیہ یوگی نامی شخص کے زیر اثر بڑے فیصلے لینے کا…

[nouhamiri]

Chitra Ramkrishna: Chitra Ramkrishna arrested by CBI in NSE co-location scandal

Chitra Ramkrishna: Chitra Ramkrishna arrested by CBI in NSE co-location scandal

The Central Bureau of Investigation late Sunday evening arrested Chitra Ramkrishna, former CEO of National Stock Exchange (NSE) in connection with its ongoing probe in the NSE co-location scandal. She was arrested in Delhi and will be produced before a local Court on Monday. The agency will seek her custodial interrogation from a local Court. The former NSE chief was denied anticipatory bail by a…