1. CAPITAL MARKET SCAMS

2. OVERVIEW
• CAPITAL MARKET
• CAPITAL MARKET SCAMS
• HARSHAD METHA
• KETAN PAREKH

3. CAPITAL MARKET
• THE CAPITAL MARKET IS THE MARKET FOR
SECURITIES
• IN THIS COMPANY AND GOVERNMENT CAN
RAISE LONG TERM FUNDS
• IT’S A MARKET IN WHICH MONEY IS LENT FOR
PERIODS LONGER TAH A YEAR
• THE CAPITAL MARKET INCLUDES THE STOCK
MARKET AND BOND MARKET

4. WHAT IS CAPITAL MARKET SCAM?
• IT IS BASICALLY THE FRAUD DONE IN THE
CAPITAL MARKET WITH THE INVESTORS BY
MANUPULATING THE FACTS IN ORDER TO
ATTAIN ENORMOUS PROFITS

5. INTRODUCTION TO
“BIG BULL OF THE TRADING FLOOR”
• HARSHAD MEHTA
• THE GREAT INDIAN SCAM -1992

6. WHO WAS HE?
• HARSHAD MEHTA
• STARTED HIS CAREER WITH NEW INDIA
ASSURANCE COMPANY
• QUIT HIS JOB IN 1981 TO BECOME A SUB-BROKER
• WENT BANKRUPT IN 1982 AND RECOVERED
SOON TO BECOME MORE STRONGER
• HE WANTED TO BECOME THE MOST SUCCESSFUL
BROKER- THERE BY HE EARNED THE NAME OF
“THE BIG BULL”

7. WHAT WAS THE SCAM ABOUT?
• DIVERSION OF FUNDS
• USE OF READY FORWORD (RF) TO MAINTAIN
SLR (STATUTORY LIQUIDITY RATIO)
• CREATIVE ACCOUNTING
• INTRA-DAY TRADING

8. HOW IT WAS DONE AND THE ROLE OF
BROKER ?
• MEHTA SOON MASTERD THE TRICKS OF
TRADE BY MANAGERING SEVERAL BROKERS
AND SET OUT ON DANGEROUS GAME PLAN
• MEHTA HAI SIPHONES OFFTHE HUGE MONEY
FROM SEVERAL BANKS AND MILLION OF
INVESTORS WERE CONEDIN THE PROCESS.
• HIS SCAM WAS EXPPOSED AND THE MARKET
CRASHED.

9. EXPLOITING THE LOOP HOLE IN THE
BANKING SYSTEM
• HE TRIGGERED THE RISE IN BOMBAY STOCK EXCHANGE
IN THE YEAR 1992 BY TRADING IN SHARES AT
PREMIUM ACROSS MANY SEGMENTS
• TAKING ADVANTAGES OF LOOPHOLES IN THE BANKING
SYSTEM, HARSHAD AND HIS ASSOCIATES TRIGGERED A
SECURITIES SCAM DIVERTING FUNDS TO THE TUNE OF
RS 4000 CRORES FROM THE BANKS TO STOCK HOLDERS
BETWEEN APRIL 1991 TO MAY 1992

10. • HE WAS ARRESTED AND BANED FOR LIFE FROM
TRADING IN THE STOCK MARKETS
• MAJOR CULPRITS WERE BROKERS, BANKERS AND
FINANCIAL INSTUTIONS.
• HE WAS CHARGED WITH 72 CRIMINAL
OFFENCES. A SPECIAL COURT ALSO SENTENCED
SUDHIR MEHTA, HARSHAD’S BROTHER, 6
OTHERS, INCLUDING FOUR BANK OFFICIALS.

11. • THEY GOT RIGROUS INPRISONMENT FROM 1
YEAR TO 10 YEARS ON A CHARGE OF DUPING
STATE BNK OF INDIA TO THE TUNE OF RS 600
CRORES IN CONNECTION WITH THE SECURITES
SCAM THAN ROCKED THE FINANCIAL MARKETS
IN 1992.

13. HIS FAVORITE STOCKS INCLUDED
• ACC
• APOLLO TYRES
• RELIANCE
• TATA IRON AND STEEL CO. (TISCO)
• BPL
• STERILITE
• VIDEOCON

14. MARKET AT THE TIME OF HARSHAD
MEHTA SCAM

15. THE END OF BULL STORY…
• LIFESTYLE (FLASHY CARS AND LIFE LIKE A
CELEBRITY)
• 31ST DECEMBER 2001- THE DEATH OF THE
BULL
• FOREVER REMEMBERED AS THE ARCHITECT
RS. 50 BILLION SCAM