PRESENTATION

ON
STOCK MARKET SCAMS
IN INDIA
(1991 onwards)
PRESENTED TO:
PRESENTED BY:
DR. D. D.ARORA
(PROFESSOR)
NO. 11
Ms. SHILPY

SACHIN
ROLL

CONTENTS
Introduction of stock market
Meaning of stock exchange
History of indian stock market
Meaning of security scam
Type of security scam
Stock market scams in india
Guidelines for regulations of financial
market
References

INTRODUCTION OF STOCK
MARKET
A stock market or equity market is
the aggregation of buyers and sellers (a
loose network of economic transactions,
not a physical facility or discrete entity) of
stocks (also called shares); these may
include securities listed on a stock
exchange as well as those only traded
privately.

Meaning of stock exchange

A stock exchange is a place to trade stocks.

Companies may want to get their stock listed on
a stock exchange. Other stocks may be traded
"over the counter", that is, through a dealer. A
large company will usually have its stock listed on
many exchanges across the world.
Exchanges may also cover other types of security
such as fixed interest securities or indeed
derivatives.
At present there are 23 stock exchanges in India.

History Of Stock Market

Indian stock market marks to be one of the oldest
stock market in Asia. It dates back to the close of
18th century when the East India Company used
to transact loan securities. In the 1830s, trading
on corporate stocks and shares in Bank and Cotton
presses took place in Bombay. Though the trading
was broad but the brokers were hardly half dozen
during 1840 and 1850. . The informal group of
stockbrokers organized themselves as the The
Native Share and Stockbrokers Association which,
in 1875, was formally organized as the Bombay
Stock Exchange (BSE).

Meaning of security scam

Scams have been occurring in stock markets
across the world at regular intervals and
these have resulted in people loosing their
huge capitals invested in various type of
securities. Stock market scams are also
called securities scam as different types of
securities are traded in stock market. Stock
market scams are result of various type of
manipulations and other processes carried
out by investors and traders at various level.

Types of security scam

Brokerage misguidance
Technology frauds
Market manipulations

STOCK MARKET SCAMS IN

INDIA
(1991 Onwards)

THE 1992 SECURITY SCAM

Harshad M Mehta was an Indian stockbroker, well known

for his wealth and for having been charged with numerous
financial crimes that took place in 1992. It was alleged that
Mehta engaged in a massive stock manipulation scheme
financed by worthless bank receipts, which his firm
brokered in "ready forward" transactions between banks.
The instrument used by him was the bank receipt(BR). The
seller of securities, gave the buyer of the securities a BR. As
the authors write, a BR "confirms the sale of securities. It
acts as a receipt for the money received by the selling
bank. "Two small and little known banks the Bank of Karad
(BOK) and the Metropolitan Co-operative Bank (MCB)
came in handy for this purpose.

BHANSALI SCAM (1995)

Businessman Chain Roop Bhansali invited investments
in his financial outfits. The Bhansali scam resulted in a
loss of over Rs 1,200 crore (Rs 12 billion). He first
launched the finance company CRB Capital Markets,
followed by CRB Mutual Fund and CRB Share Custodial
Services. He ruled likefinancial wizard 1992 to 1996
collecting money from the public through fixed
deposits, bonds and debentures. The money was
transferred to companies that never existed. CRB
Capital Markets raised a whopping Rs 176 crore in three
years. In 1994 CRB Mutual Funds raised Rs 230 crore
and Rs 180 crore came via fixed deposits. Bhansali also
succeeded to rise about Rs 900 crore from the markets.

KETAN
(2001)

PAREKH

SCAM

In Spite of the recommendations made by the

Janakiraman Committee Report in 1992 to prevent
security scams from happening in the future another
security market took place in 2001. This involved the
actions of one major player by the name of Ketan
Parekh. Hetargetedsmaller exchanges like the
Allahabad Stock Exchange and the Calcutta Stock
Exchange, and bought shares in fictitious names.
Ketan borrowed Rs 250 crore from Global Trust Bank
to fuel his ambitions. Ketan along with his associates
also managed to get Rs 1,000 crore from the
Madhavpura Mercantile Co-operative Bank.

Satyam scam (2009)

Satyam computer was founded in 1987.It converted
into public limited co. In 1992.Ramalinga Raju was the
chairmen of the company that time. He mislead various
investors. He transferred his money to mayas co. ltd.
On 22 jan. 2009 CID told to court that there is 40000
employees not 53000 as reported by company. The
company's balance sheet as of September 30 carries
"inflated (non-existent) cash and bank balances of Rs
5,040 crore (as against Rs 5,361) crore reflected in the
books.
On 5 February 2009, the six-member board appointed
by the Government of India named A. S. Murthy as the
new CEO of the firm with immediate effect.

NSEL SCAM (2013)

An innocuous-looking notification from the Forward Markets
Commission (FMC) came in on July 12, 2013. And in the offices
of the National Spot Exchange Limited (NSEL), a commodities
exchange promoted by the Jignesh Shah-led Financial
Technologies (FinTech), things began to change.
There are rules governing commodity trading, which is
regulated firmly by the Forward Market Commission (FMC).
Under the Forward Contracts Regulation Act, any contract that
is called spot must be settled within 11 days that is, both
delivery of goods and transfer of money must happen within 11
days (called T+11). The 11 days give the buyer and seller
time to complete the contract. Thus, this would then not
become a forward contract. This also includes ponzi scheme.

GUIDELINES OF SEBI FOR REGULATION OF

FINANCIAL MARKET

Prohibition of certain dealing in

securities
Prohibition against market
manipulation.
Prohibition on unfair trade practice
relating to securities.

CONCLUSION
In conclusion we can say that inspite
of government actions for regulations
of scams, stock market scams are
becoming quite common in present
time.it is because that govt. Does
not take action at right time.
Secondly , the SEBI should be
provided with more power to take
actions against such companies.

K
N
THA
YO U