In an order which suggests that Ketan Parekh might still be playing an active role in the stock market, the Securities and Exchange Board of India on Thursday debarred 26 entities from transaction in securities until further orders. .

SEBI has also referred the matter to both the Income-Tax department and to the Enforcement Director, the ad interim ex parte order said.

The entities have been banned for circular and synchronised trades, both market and offmarket, in five scrips; and for creating bogus volumes and artificial price rise in those scrips during a roughly two-year period starting early 2007.

These scrips were Cals Refineries, Confidence Petroleum, Bang Overseas, Shree Precoated Steels (now Ajmera Realty and Infra India) and Temptation Foods.

Some of the accused clients (the banned entities) are connected companies floated by two sons of Mr Shirish Maniar who along with Mr Ketan Parekh, was chargesheeted by CBI in the Madhavpura Merchantile Cooperative Bank case and which case is still pending, noted the SEBI order.

Many of the connected clients in the case were acting as conduits for Ketan Parekhs funds, said SEBI, attributing this to an observation contained in an income-tax investigation into Ketan Parekhs activities. At least five such clients were related to Mr Shirish Maniar.

Parekh being already debarred from dealing in securities by SEBI, it appears that he has used the connected clients (currently banned) as his front entities for executing trades in the securities market, said SEBI.

In the ensuing flow of funds there is a possibility that funds originating from Parekh were being integrated into the banking system, said the markets regulator, explaining why the issue had been referred to the Enforcement Directorate.

And since the connected clients appear to have made deliberate and substantial losses in their dealings in Cals, Shree Precoated and Temptation Foods, they may use this as a set-off to pay reduced income-tax, warranting investigations by that department, said SEBI.

SEBI itself would initiate investigations into the transactions related to the stock market (also off-market) deals of the clients, involving examination of fund flows, recording of statements under oath and the like, it said.