PRESENTATION ON LAST DECADE'S SCAMS AND FROM THAT REFORMS COMES IN STOCK MARKET

1. Scams in Indian Capital Market and
Reforms based on that Scams.
Presented By- Bhoomi Detroja (19SOMBA21003)

2. INTRODUCTION
• A good capital market is essential pre requisite for industrial and
commercial development of a country credit is required and
supplied on both short term and long term basis. The money
market caters to the short term needs only. The long term needs
are met by the capital market. Capital markets channel the wealth
of savers to those who can put it to long-term productive use,
such as companies or governments making long-term
investments.
• Examples of highly organized capital markets are the New York
Stock Exchange, American Stock Exchange, London Stock
Exchange.

3. Capital Market
• The term capital market refers to the institutional arrangements
for facilitating the borrowing and lending of long term funds..
it may be defined as an organised mechanism for effective and
efficient transfer of money capital or financial resources from
the investing parties to the entrepreneurs engaged in industry
or commerce.

4. WHAT IS CAPITAL MARKET SCAM
• It is bascially the fraud done in the capital market with the
investors by manupulating the facts in order to attain enormous
profits..
• Frauds mostly done with :
1) Retail Investors
2) Financial Institutions
3) Banks

5. Scams in Indian Capital Market :

6. 1) Harshad Mehta Scam
 Scam by : Harshad Mehta
 Time period : 1992
 Amount : 4000 cr.
 Known as : Big Bull

7. Summary of Scam
• Took advantage of weak financial services regulation and loop
holes in banking system. By help of bank employees to get
fake Bank Receipt and Used that money to raise stock price in
market for personal gain.

8. 2) CR Bhansali Scam
 Scam by : Chain Roop Bhansali
 Time period : 1996
 Amount : 1200 cr.
 Known as : CRB Scam

9. Summary of Scam
• He first launch finance company named CRB capital market
followed by CRB mutual fund and CRB custodial services
modus operandi of this scam. He was collecting money from
public by fixed deposits bonds and debentures and transfer
those money in company never exist (Dummy Company).

10. 3) Ketan Parekh Scam
 Scam by : Ketan Parekh
 Time period : 2001
 Amount : 800 cr.
 Known as : Bombay bull

11. Summary of Scam
• He involved in malpractices and circular trading in selected
stock we have borrowed money from bank to manipulate share
prices and gain profit from those stocks.
• He involved in insider trading, by this he easily manipulate
investors mind. He was found involved in cheating with banks
by misrepresenting facts, falsifying accounts, ripping-off the
stock market prices and exploiting investors’ decisions,
mishandling public money, bribing company directors to
enable him to do insider trading.

12. 4) Satyam Scam
 Scam by : Ramalinga Raju
 Time period : 2009
 Amount : 7000 cr.
 Known as : Satyam Scandal

13. Summary of Scam
• The biggest corporate scandal
• The top management software company named satyam done
inappropriate changes in accounts to show inflated sales profit
and margins from market shares in between the time period of
2003 to 2008.

14. 5) Sahara Scam
 Scam by : Subrata Roy
 Time period : 2010
 Amount : 24,029 cr.
 Known as : SS Scam

15. Summary of Scam
• Issued bonds of 29.6 million investors without following SEBI
norms and regulation as well as investor protection measures
given by SEBI in regulation they ignored it too.

16. 6) NSEL Scam
 Scam by : Jignesh Shah, Shreekant Javalgekar
 Time period : 2013
 Amount : 5,500 cr.
 Known as : National Spot Exchange Ltd

17. Summary of Scam
• They offered commodity that only exist on paper not exist
physically at all. Procured money from investors by contract
on commodities. They attract investors by offering fixed return
on pair the contract of commodities

18. Reforms in capital market after Scams

19. Harshad Mehta Scam
 After Harshad Mehta scam made changes made by Sebi was :
1) Strong bank regulations made by regulatory authorities.
2) BR removed by RBI
3) Securities law amendment act 1995 was bought in.
4) Rolling settlement system made compulsory

20. CR Bhanshali Scam
 SEBI prevent over half dozen mutual funds from floating MF
schemes.
 Issued Merchant banker’s showcause notice for various
irregularities and breach of regulations.

21. Ketan parekh Scam
 Trading cycle was cut short from week two days (T+2)
 Carry forward system in stock trading called BADLA was
banned.
 Introduced forward trading in the form of exchange traded
derivatives.
 Withdrew broker control over stock market

22. Satyam Scandal
 Strict civil and criminal laws
 Rotation of auditors in every five years
 Introduce serious fraud investigation office
 Adoption of international financial reporting standards.
 As per Companies Act 2013, independent directors constitute
at least 1/3 of board of directors in every public limited
company

23. Sahara Scam
 SEBI made SEBI investor protection and education fund
regulation 2009 to safeguard investors from frauds.
 Sahara scam lead SEBI to a change in the law, making the
rules of issuing shares and debentures clearer.
 SEBI shall constitute an advisory committee for
recommending investor education and protection activities that
may be undertaken by directly board or through any other
agency.

24. NSEL Scam
 Government done changes in forward contract regulation act
after NSEL scam.
 Government withdrew exemption granted to all sport
commodities exchange for launching one day forward contract
in agriculture and non agriculture item with immediate effect.

25. Conclusion
 As we saw the scammers knew the loop holes in banking
system as well as they know how to exploit those
loopholes, they were d smart enough to manipulate stock
prices and the regulatory system. frequent amendments
that come every year in the SEBI Act and Regulations.
 Although the occurrence of stock market scams and
corporate scandals has reduced subsequent to the
establishment of SEBI, but hasn’t completely stopped.