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Years after the Harshad Mehta scandal rocked the Indian markets, another market manipulation scandal emerged involving a broker named Ketan Parekh. Just like Mehta, Parekh used various fraudulent practices to manipulate stock prices and create artificial demand in the market. This scandal raised concerns about the lack of regulatory oversight and the need for stricter enforcement mechanisms within the Indian financial system.

Ketan Parekh’s market manipulation scheme involved using borrowed funds to prop up stock prices, creating a facade of profitability and attracting unsuspecting investors. He manipulated stock prices of certain companies through circular trading and price rigging, artificially inflating their value to make a quick profit at the expense of others. Parekh’s actions caused massive disruptions in the market and shook investor confidence, leading to widespread repercussions across the financial sector.

The Ketan Parekh scandal highlighted the vulnerabilities in the Indian financial system and exposed the loopholes that allowed such manipulation to occur. It underscored the urgent need for stricter regulations, improved transparency, and enhanced oversight to prevent such incidents from happening in the future. The scandal served as a wake-up call for regulators and policymakers to address the weaknesses in the system and reinforce safeguards to protect investors and maintain market integrity.

In the aftermath of the scandal, authorities took various measures to address the regulatory gaps and strengthen the oversight of financial markets. The Securities and Exchange Board of India (SEBI) introduced stricter regulations to monitor stock market activities, prevent price manipulation, and enhance transparency in trading practices. SEBI also increased surveillance and enforcement actions to deter market manipulators and maintain market stability.

Investor awareness and education also played a crucial role in preventing future market manipulation scandals. Educating investors about the risks of fraud, manipulation, and speculative trading practices can help them make informed decisions and protect their investments. It is essential for investors to conduct thorough research, exercise caution, and seek advice from trusted sources before making any investment decisions.

The Ketan Parekh scandal serves as a cautionary tale about the dangers of market manipulation and the importance of upholding ethical standards in financial markets. It reminds us of the need for vigilance, integrity, and accountability in the conduct of market participants to safeguard the interests of investors and maintain trust in the financial system. By learning from past mistakes and implementing robust regulatory measures, we can build a more resilient and transparent financial system that fosters fair and efficient markets for all stakeholders.