Ketan Parekh Scam Explained: K-10 Stocks, Front-Running, and Lessons for Investors

The Indian securities market has witnessed several cases of large-scale manipulation over the years, and one of the most notorious among them is the K-10 scam, masterminded by stockbroker Ketan Parekh. This scam not only shook investor confidence but also wiped out an estimated ₹30,000 to ₹40,000 crore in investor wealth.

In this blog, we will give you an overview of who Ketan Parekh is and how he conducted scams in the Indian Market, leading to massive losses for Indian investors.

Who was Ketan Parekh and What was the K-10 scam?

Ketan Parekh was a stockbroker and was associated with NH Securities. He was also an associate of Harshad Mehta, who was a key figure behind the 1992 securities market scam. He was involved in a scam, which was also known as the “K-10 Stocks Scam”. In this scam, he identified 10 stocks that generally have low liquidity and manipulated their prices. He borrowed funds from Madhavpura Mercantile Cooperative Bank, created artificial demand, and generated hype in the media regarding these 10 stocks. He also conducted circular trading in which the buying and selling of stocks is conducted between related parties. 

The stocks which were selected by Ketan were related to the IT and media sectors. In the pump and dump strategy adopted by Ketan Parekh, the prices of those 10 stocks were inflated artificially, and when the retail investor purchased those stocks, they were dumped by him.

How was the Ketan Parekh Scam Exposed?

The scam was exposed when the Securities and Exchange Board of India noticed some unusual price movements in a few selected stock prices. When the case was investigated by the SEBI, it was found that Parekh had taken a huge loan from the Madhavpura Mercantile Cooperative Bank. SEBI traced the circular trading between the Parekh firm and linked brokers. 

Impact on the Securities market after the Ketan Parekh Scam

The stock market crashed after the 2001 Union Budget because the K-10 stocks crashed. Around 30 to 40 thousand crore of investor wealth was wiped out during such a correction. Retail investors faced a huge setback and lost faith in the market. 

Another Scam by Ketan Parekh

After the 2001 K-10 scam, Ketan Parekh was barred from participating in the securities market. But despite this, he was involved in another front-running scam. A front-running scam is an illegal practice in which someone with insider information executes trades, through which they earn profit from the anticipated price movement a large order will cause. 

Let’s understand the front running with an example: when a large buyer is about to execute a large trade, the front runners purchase the stock at a lower price and then sell it once the order is placed by the big buyer; thereby selling at a higher price and realizing quick profits. From this whole process, Ketan Parekh gained around ₹65.7 crore between 2021 and June 2023. 

How was this Scam Exposed?

In early 2025, SEBI uncovered a sophisticated front-running operation led by Ketan Parekh, netting him approximately ₹65.7 crore. Parekh leveraged insider information, leaked by a Singapore-based intermediary about large institutional trades. Acting on real-time intelligence, his network placed strategic early trades ahead of these orders. As the institutional transactions hit the market and prices shifted, Parekh’s team swiftly profited. The investigation revealed a complex scheme involving multi-tiered trading structures, covert communications (via burner phones and WhatsApp), and even informal cash settlements. 

SEBI tracked over 10 mobile numbers, which were saved under various names, including Jack, Boss, John, and Bhai, among others. By analyzing these calls and hotel check-ins, SEBI traced Ketan Parekh’s trading activities. SEBI’s fast, multi-location raids resulted in interim trading bans on Ketan Parekh and 10 other entities and ₹65.7 crore in liability against Parekh.

SEBI banned Ketan Parekh and 2 others from accessing the securities market and froze their trading accounts. 

Lesson for Investors

There are certain lessons that an investor should learn from the scam of Ketan Parekh. A few such lessons are as follows:

1. Do not follow the trend: Generally, investors follow stocks that are hyped because of their constant rise in prices. 
2. Stocks Trading at Upper Circuits: As an investor, it is advised to avoid stocks that constantly trade at upper circuits. 
3. Low Liquidity: Generally, stocks that have low volume are easy to manipulate; therefore, one should avoid investing in stocks that have low liquidity.
4. Company Financials: Before investing in any stock, through research should be conducted, including an analysis of the company’s revenue, profits, debt, and other key financial metrics.

Conclusion

On a concluding note, we all know that investment in shares or equity helps us create wealth in the long run, but due to certain scams, such as the K-10 scam, investors lose confidence in the financial markets. Investors must stay vigilant, focus on strong fundamentals, and avoid shortcuts that promise quick gains. Always remember: informed, disciplined investing is the key to success. Therefore, it is advised to consult your investment advisor before making any investment decision.

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