SEBI Court rejected Ketan Parekh’s plea to compound the case for penalty payment default

A special court here has dismissed former stockbroker Ketan Parekh’s plea to quash the case initiated by Sebi for non-payment of fines imposed by the market regulator, noting that the accused had prima facie “deliberately” violated norms. RM Jadhav, a special judge for cases under the Securities and Exchange Board of India (SEBI) Act, in an order passed on October 4, ruled that Parekh’s plea to compound the case against him was “premeditated and unwarranted”.

Sebi initiated a criminal case against Parekh after he failed to pay the penalty for violating the board’s regulation. In response, Parekh applied before the court to close the case by compounding.

Parekh said in his petition that the complaint was filed in 2003 for the alleged violation of 1997.

Almost 25 years have passed since the alleged violation. Parekh’s counsel submitted before the court that he had offered to pay whatever amount was demanded by the board.

“The applicant intends to commit a compound offense and is willing to pay the contents of the present complaint satisfying the norms and factors stated by SEBI,” Parekh submitted through his counsel.

Parekh argued that on previous occasions also the cases against him were closed after payment of fine. So far he has paid a fine of Rs 3.37 crore.

However, Sebi argued that Parekh, through his associates and investment firms, placed orders in excess of the prevailing market price and also cornered a large pool of stocks through off-market deals.

Additionally, shares were sold in large volumes at manipulated high prices of Scripps, leading to stock market collapse, the board submitted.

Considering the gravity of the offence, the accused were barred from entering the stock market. However, they had transacted in the stock market for which a decision imposing penalty was passed, according to SEBI.

The court noted, “prima facie the acts of the accused in violating the rules of regulation of SEBI are deliberate”.

Further, there is violation of SEBI rules and regulations by the accused even after a period of 14 years, the court said.

“The accused is alleged to have traveled abroad without taking the permission of the court. The presence of accused Ketan Parekh is secured on the declaration. Therefore, the conduct of the accused for disobeying the order also needs to be noted,” the court observed. .

Considering the facts and circumstances, the judge observed that SEBI was justified in opposing Parekh’s application.

“Having regard to the nature of the allegations and the conduct of the accused to the contrary, I find that compounding of the offense is unreasonable and undesirable,” the court observed and rejected the plea.