Why is it that we are so intrigued by scams?

There is something about operating in the grey zone that appears attractive to us. It is the adrenaline rush that accompanies the breaking of rules, the temptation that comes with doing something outside the conventional norms, that prompts us to cross over to the dark side.

As the SonyLiv web-series ‘Scam 1992’ has shown, living outside the rules can enable you to jump a few hundred stepping stones and reach the top in the blink of an eye. Harshad Mehta and his flamboyant lifestyle as the ‘Bachchan of Dalal Street’ have attracted the attention of the entire country.

If you have watched till the end of the web-series though, you will know that breaking the rules is not for the faint-hearted. If you want to live on the edge, you have to be prepared for the stress and the heartburn that comes along with it.

One of the most popular characters in ‘Scam 1992’ is that of Ajay Kedia. This character is based on Ajay Kayan stockbroker.  

According to BookMyShow, “There’s also stock and money market broker Ajay Kedia (Shadaab Khan) based on Ajay Kayan’s life. Kayan was also part of the bear cartel that opposed Mehta.”

In the series, Kayan appears as a suave and confident broker who has the Calcutta Stock Exchange in the palm of his hand. In fact, Kayan loses no opportunities to undermine the protagonist Harshad Mehta and the fact that he is an outsider to the inner circle of elite brokers.

Let us take a deeper look at the involvement of Ajay Kayan broker, and attempt to retrace his story, from the Harshad Mehta scam to his exoneration, to his life after scam 1992.

Ajay Kayan Scam 1992

In the words of Sucheta Dalal, “Kayan is a broker who was investigated and accused in the Securities scam of 1992 and had close links with Citibank at that time.”

During the 1980-90s, the stock market was dominated by a few large players. Harshad Mehta, Manu Manek, Ajay Kayan and a few other players ruled the market. This period often saw direct conflicts between the two opposing ideologies that exist in the stock market – the bull cartel and the bear cartel.

ajay kedia

The bull cartel operated on an optimistic outlook and assumed that the prices of the shares that they invested in would rise. Once the price increased, the bullish traders sold off the shares at a higher price and made large capital gains.

On the other hand, the bear cartel adopted a more pessimistic point of view with regard to stock trading. This means they focused on those companies whose share price will fall in future. The bearish traders sold the shares at the high price, waited for the price to fall, and then bought the shares back again at the low price, thus making a neat profit from arbitrage.

Of course, under normal circumstances, bullish traders and bearish traders can operate in peaceful coexistence. This is because the subject of their analysis and attention is generally mutually exclusive. The bullish traders focus on those companies where a price appreciation is expected and the bearish traders focus on those companies whose stock price is expected to fall in the near future.

The conflict arises when the bearish traders and the bullish traders focused on the same set of stocks.

When this happens, we often see a full-fledged fight break out between the two parties. In today’s stock market, this rarely happens as SEBI has stringent rules about market manipulation and the concentration of market share among a small group of traders.

Back in the 1980-90s however, market manipulation was rampant as much of the power was concentrated in the hands of a few people.

In this case, the bull cartel was headed by Harshad Mehta, and the bear cartel was headed by players like Manu Manek and Ajay Kayan.

These two cartels were often at loggerheads with each other, because of their personal conflicts. Thus, we often saw the two cartels targeting the same set of companies, for the sole reason of emerging triumphant over the other party.

In fact, when it comes to Ajay Kayan Harshad Mehta, their rivalry exceeded the boundaries of the share market and extended into the money market as well.

Money Market Involvement

The money market was characterized by the demand for short-term credit by banks. This demand was usually fulfilled with the use of ready forward deals. Here, banks exchanged securities for money. These agreements generally lasted for a 15-day period, after which the securities were returned and the money was repaid with an interest.

In those days, Kayan was very closely associated with Citibank.

In fact, if you have watched the series Scam 1992, you will be familiar with the camaraderie that Ajay Kedia shared with Tyagi from Citibank.

The money market was a lot less regulated during those days, and often, we would see that banks would directly transfer large amounts of money into the accounts of brokers. Then, it would be the brokers’ responsibility to find the best deals and lend out that money in exchange for securities.

However, while the money was in the brokers’ accounts, those brokers would use that money to invest in the stock market. The more the credit, the larger the position they could adopt in the stock market.

In fact, Harshad Mehta’s scam was first exposed because he took a credit of Rs. 500 crores from the State Bank of India without providing any securities or bank receipts in return.

Ajay Kayan Citibank

According to RBI’s Janakiraman Committee, Citibank approached a number of state-owned banks and public sector companies and asked them to invest in its portfolio management services. The selling point here was the attraction of large returns by using that money which was lying idle with these companies.

Much of these pitches worked, and a number of state-owned banks and government companies started investing with Citibank. The funds that came in through this source, were then provided to Ajay Kayan stockbroker and others, who used this money in the stock market. This credit was used to finance the huge short positions that the bear cartel often adopted.

The securities mentioned in this case generally referred to fixed income instruments like bonds. Whenever the bond market took a tumble, banks like Citibank, which owned a large number of bonds, suffered huge losses.

When this happened, those bonds would be sold at higher prices to brokers like Kayan. It was a symbiotic relationship of sorts. Kayan would buy the bonds at a higher price, and in return, Citibank would provide him with the funds he required to maintain his short positions in the stock market.

The aftermath of Scam 1992

If you think about it, the way Kayan and the bear cartel functioned is very similar to the way that Harshad Mehta himself functioned. The only difference was that Harshad Mehta went too far.

Like Icarus who flew too close to the sun and burned his wings, so too did Harshad Mehta. He went too far, and crashed and burned to the ground.

After Sucheta Dalal’s scathing expose, Ajay Kayan, too, fell under suspicion by the regulatory authorities. However, he was able to clear all the charges on him and emerge from the murkiness surrounding the scam.

Back in those days, Kayan used to run the stockbroking firm C. Mackertich & Co. with his father Gouri Shankar Kayan. Following the investigation, the trading license of this firm was suspended by BSE, NSE and the Calcutta Stock Exchange.

According to The Telegraph, “The three bourses - the Bombay Stock Exchange, the National Stock Exchange and the Calcutta Stock Exchange - had de-activated the trading terminals of C. Mackertich Ltd, as for all practical purposes it was the reincarnation of the now-defunct notified firm. Despite the interim relief offered by the Calcutta high court, the CSE has decided to bar C. Mackertich Ltd from trading because its membership stands 'impounded'.”

Involvement in the Ketan Parekh Scam

ketan parek

Kayan was again dragged back into controversy when the Ketan Parekh scam broke. The charge was that Kayan had taken up large short positions in those companies which were part of Ketan Parekh’s K-10 portfolio of stocks.

According to Current News – “Utsav Parekh and Ajay Kayan were reportedly key players in the “bear cartel” that had opposed “big bull” Harshad Mehta, the late stockbroker who was the lynchpin of a huge stock-market scandal in 1992. These two individuals had used funds belonging to Citibank and Canara Bank in an unauthorized manner to play the markets at that time. Nine years later, when another stock-market scam broke out, this time involving broker Ketan Parekh, the names of these two men again came up. “Our information is that Utsav Parekh has been frequently in touch with some of the surviving elements of the Ketan Parekh cartel,” an investigator told CURRENT on condition of anonymity.”

Road Ahead

Eventually, though, the Ajay Kayan group was cleared of all charges.

According to a report by Times of India, “Bear operator Ajay Kayan group has been given a clean chit by market regulator SEBI, which examined the stock market scam. In its second interim report, SEBI observed that “Broking entities of Ajay Kayan group were not defaulter in any settlement on any of the stock exchanges during the period of the scam.”

These days, Ajay Kayan can be found at the helm of the Kolkata based stockbroking firm SMIFS Ltd. He is joined here by his old partner, Utsav Parekh.


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