Top Indian Broker Faces Charges
BOMBAY, India (AP) _ A special court returned a top stockbroker to police custody Saturday, a day after Indian markets dived on allegations that he used bank funds in order to drive up share prices.
Ketan Parekh, a major player on Indian stock exchanges, faces charges of cheating, forgery and hatching a criminal conspiracy. He faces life imprisonment if convicted. He denies any wrongdoing.
Bharat Raghuvanshi, a lawyer for the federal Central Bureau of Investigation, told the court that Parekh was arrested Friday following a complaint by the Bank of India that it was defrauded of $27.9 million.
The bank claimed that Parekh used money he had borrowed from the bank in order to drive up the value of certain stocks by buying a lot of them. The bank said he then caused it financial loss when a cooperative bank from whom he borrowed money later _ in order to pay back the Bank of India _ defaulted.
The reason the cooperative bank defaulted was because the value of the stocks _ which he had allegedly artificially raised _ plunged and the shares he had offered as collateral had very little value. Parekh has said he hasn’t had the chance to pay back what he owes.
A judge agreed to a prosecution’s request that the bureau get custody of Parekh until April 9 to allow ``a full and proper opportunity to investigate.″
Indian markets have fallen by almost 15 percent since March 2. The Securities and Exchange Board of India is probing allegations of share price manipulation by 14 brokerages. Federal police raided the homes and offices of several brokers last week. Earlier this month, the president of the Bombay Stock Exchange resigned following allegations that he profited from privileged trading information.
News of Parekh’s arrest saw the benchmark Bombay Stock Exchange Sensitive Index plunge 4 percent on Friday.