Although there are many scams reported by the equity investors per annum, allow us to have a quick study of three of the past biggest scams that shook the Indian share market.
Harshad Mehta Scam
During the first 1990s, Harshad Mehta, a stockbroker, started facilitating transactions of ready forward deals among the Indian banks, acting as an intermediary. During this process, he wont to raise funds from the banks and subsequently illegally invest an equivalent within the stocks listed within the Bombay stock market to inflate the stock prices artificially.
Because of this malpractice, the Sensex moved upwards at a quick pace and reached 4,500 points in no time. The retail investors started feeling tempted seeing the sudden rise of the market. An enormous number of investors started investing their money within the stock exchange to form quick money.
During the amount from April 1991 to May 1992, it’s estimated that around five thousand crore rupees were diverted by Harshad Mehta from the Indian banking sector to the Bombay stock market . After the fraud was revealed, the Indian stock exchange crashed consequently. And as guessed, Harshad wasn’t during a position to repay crores of cash to the Indian banks.
Conclusively, Harshad Mehta was sentenced to jail for 9 years by the honorable court and was also banned to hold out any share trading activity in his lifetime.
Ketan Parekh Scam
After the Harshad Mehta scam, a accountant named “Ketan Parekh” had similar plans of arranging comparable securities scam. Coincidently, Ketan wont to work as a trainee under Harshad Mehta earlier and hence also referred to as the heir of Harshad Mehta’s scam technique.
However, Ketan Parekh not only wont to procure funds from the banks but also other financial institutions. Like Harshad Mehta, he also wont to inflate the stock prices artificially. aside from the Bombay stock market , the opposite stock markets where Ketan Parekh actively operated were the Calcutta stock market and therefore the Allahabad stock market .
Nonetheless, Parekh wont to deal mostly in ten specific stocks, also referred to as the K-10 stocks. He applied the concept of circular trading for inflating their stock prices. You would possibly be surprised to understand that even the promoters of some companies paid him to spice up their stock prices within the market. Anyways, after the Union budget in 2001 was announced, the Sensex crashed by 176 points. The govt of India administered an intensive investigation into this matter.
At last, it had been the financial institution who determined Ketan Parekh to be the mastermind behind this scam and he was barred from trading within the Indian stock exchanges till 2017.
Satyam Ramalinga Raju, the Chairman of Satyam Computer Services Limited (SCSL), Mr. Ramalinga Raju confessed to SEBI of the manipulation done by him within the accounts of the corporate . This corporate scandal was carried on from 2003 till 2008. It’s estimated that the fraud happened for around Rs five thousand crores of money balances because the company by falsifying revenues, margins.
The stock price of Satyam fell drastically after this incident. Eventually, CBI took charge of conducting the investigation into the matter. They filed three partial charge sheets against Satyam. Subsequently, these three partial charges were merged into one blotter.
In April 2009, Raju and nine others involved within the fraud were sentenced to jail by the honorable court. Consequently, Mahindra Group acquired SCSL and it had been renamed as Mahindra Satyam. It subsequently merged within Mahindra Group in 2013.
Here’s what Big Bull Harshad Mehta’s family is up to these days