SEBI Court Denies Ketan Parekh's Request to Compound Penalty Payment Case

A special court has dismissed Ketan Parekh's request to close a case filed by SEBI for not paying a penalty. The court noted that Parekh appeared to have intentionally breached regulations. Judge R.M. Jadhav, handling cases under the SEBI Act, ruled on October 4 that Parekh's plea for compounding the case was unnecessary.

Representative image

SEBI initiated legal action against Parekh after he failed to pay a penalty for violating board regulations. In response, Parekh sought to have the case closed through compounding. He argued that the complaint, filed in 2003, related to an alleged violation from 1997, nearly 25 years ago. Parekh's lawyer stated they were willing to pay any amount demanded by SEBI.

SEBI's Allegations Against Parekh

Parekh's lawyer mentioned his willingness to resolve the issue by adhering to SEBI's requirements. He also noted that previous cases against Parekh were settled after fines were paid. To date, Parekh has paid Rs 3.37 crore in fines. However, SEBI accused him of placing large orders through associates and investment firms, exceeding market prices.

SEBI further alleged that Parekh cornered a significant share pool through off-market deals. These shares were then sold in large volumes at inflated prices, leading to a stock market crash. Due to the seriousness of these actions, SEBI barred him from the stock market.

Despite being debarred for 14 years, Parekh continued trading in the stock market, prompting SEBI to impose penalties. The court observed that his actions seemed intentional and violated SEBI rules even after his debarment.

Court Observations and Decision

The court also noted allegations of Parekh travelling abroad without permission. His presence was secured through proclamation due to non-compliance with orders. The judge found SEBI justified in opposing his plea.

Given the nature of allegations and Parekh's conduct, the court deemed compounding the offence unnecessary and rejected his plea. The decision reflects the seriousness of regulatory violations and reinforces adherence to financial regulations.