PRESENTATION ON HARSHAD MEHTA SCAM

Presented By: Rupali Khosla MBA GNA-IMT

CAPITAL MARKET
The capital market is the market for securities, where companies and govt. can raise long term funds. It is a market in which money is lend for period longer than a year. The capital market includes the stock market and the bond market.

CAPITAL MARKET SCAM

It is basically fraud done in the Capital market with the investors by manipulating the facts in order to attain enormous profits.

INTRODUCTION TO BIG BULLS LIFE

Born: 29 July 1954 Family: Gujrati Jain family Father: Mr. Shantilal Mehta, a small businessman Childhood was spent in Mumbai First Job: Dispatch clerk in the New India Assurance Company During his work, he started investing in stock market with his brother Ashwin Mehta. He has managed to get BSE brokers card.

THE RAGS TO RICHES STORY

By profession Mehta was a Chartered accountant. Started his career with New India Assurance Co. Quit his job in 1981 to become a sub-broker. Went bankrupt in 1982 & recovered soon to become more stronger. Went on to become one the most successful broker The Rags to Riches Story, thereby earning the nick name of THE BIG BULL

WHAT WAS THE SCAM ALL ABOUT ?

Diversion of funds Use of Ready Forward (RF) to maintain SLR (Statutory Liquidity Ratio) Creative Accounting Intra-day Trading The Ready Forward is in essence a secured shortterm (typically 15-day) loan from one bank to another. Bank has some securities deposits at RBI. The borrowing bank actually sells the securities to the lending bank and buys them back at the end of the period of the loan, typically at a slightly higher price, as a pawnbroker lends against jeweler.

GROWTH PERIOD OF BIG BULL

Exploiting the loop hole in the banking system: He found some wrong pattern on trades in stock exchange. Harshad Mehtas trademark style 1) He used to study fundamentals. 2) He used to buy in big quantity and than; 3) He used to make it public.

CONTD Now, he was the Harshad Mehta, boss of Growmore Research and Asset Management. He lived almost like a celebrity in a 15,000 sq. feet house. He also had a crush for flashy luxurious cars.

RECESSION PERIOD IN BIG BULLS LIFE

In 1992, first article came out against this dream merchant and the story was about 600+ crores rupees scam from SBI !! As per the article, he used ready forward deal for this scam. As per Indian law, it was not allowed to give such RF loan to any individual person by bank.

DEPRESSION OF BIG BULLS LIFE

The bear cartel has exposed the truth behind the constant rise of this Big Bull. And on one not so fine day, it was headline of Indian newspaper regarding 4000 crores rupee scam in Indian Stock Market. Bear Cartel was behind Harshad Mehta now, they filed as many cases as they can against Harshad Mehta.

CONSEQUENCES
As the scam was exposed, BR value became almost zero. Crash of some financial institutes Many suicidal notes were found near dead body of Indian stock traders. In 4000 crores scam many financial firms, many political parties and many big names were involved, but surprisingly only one man was trapped.

END OF THE BIG BULL

Late 2001, place Thane jail, the jail superintendent came to know about end of the Bull era with news of Harshad Mehta death. Reason was Heart Attack, but it was shocking to know that before he died he was proved innocent in all cases against him.

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