Ketan Parekh sentenced to three years in jail

Former stock broker found guilty of not paying a penalty imposed by SEBI

February 28, 2018 10:20 am | Updated December 01, 2021 06:50 am IST - MUMBAI

 Ketan Parekh

Ketan Parekh

A special court on Tuesday found former stock broker Ketan Parekh and his relative Kartik Parekh guilty of not paying a penalty imposed by the Securities and Exchange Board of India (SEBI) and sentenced them to three years imprisonment along with a fine of ₹5 lakh each.

Further, Special SEBI Court Judge V. C. Barde ruled that ₹3.25 lakh of the penalty amount imposed on each of them would go towards the capital market regulator. The other two accused in the matter — Navin Chandra Parekh and Kirtikumar Parekh — were acquitted by the court.

Mr. Kartik Parekh’s sentence, however, was suspended by the court to allow him to appeal. Mr. Ketan Parekh is currently in judicial custody.

Mr. Ketan Parekh and Mr. Kartik Parekh were di rectors of Panther Fincap and Management Services that acquired shares of Shonkh Technologies International Ltd. The acquisition, however, was beyond permissible limit and without statutory disclosures.

Violation of norms

The case pertains to Panther Fincap and Management Services where the duo were directors and which acquired shares of Shonkh Technologies International Ltd. The acquisition, however, was beyond the permissible limit and without the statutory disclosures.

The capital market regulator initiated proceedings in the matter in 2003 and imposed a penalty of ₹6.5 lakh on the company and the directors. According to SEBI, the individuals in their capacity as directors were persons in charge of the affairs of the company.

SEBI court’s order

Panther Fincap and the directors challenged the SEBI order at the Securities Appellate Tribunal (SAT) but lost the case in 2007. Incidentally, the company offered a demand draft for part payment of the penalty amount but it was declined by SEBI as rules do not allow part payment and deferment of the penalty.

Thereafter, the regulator filed a case at the special SEBI court that was formed to hear specific matters related the the capital market watchdog.

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