PRESENTATION ON HARSHAD MEHTA SCAM

Presented By:Rupali KhoslaShivani KauraHaneet Kailey

Loveleen ThakurRajneesh Banyal

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 lent for periods 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 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 STORYHARSHAD MEHTA- story

•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 short-term (typically 15-day) loan from one bank to another. Bank has some securities deposites 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 jeweller.

GROWTH PERIOD OF BIG BULL Exploiting the loop hole in the banking

system: He found some wrong pattern on trades in

stock exchange. Harshad Mehta’s trademark style1) 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 Harshal 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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