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Licensing system (License Raj)
No permission for Liberalization,
Privatization, Globalization
Government intervention in business
There were no permission for FIIs & FDIs
There were no specific act/law passed for
SEBI by the Government of India
Open-Outcry system
No Circuit Breakers
Economic & Market position before the
Big Bull scam
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Born in 29 July 1953, at Paneli Moti,
Rajkot District
Earned degree in Bachelor of
Commerce
Started as an employee of the New
India Assurance Company
later became a jobber on BSE for
stock broker P.D. Shukla after that
became a sub-broker for stock
brokers J.L. Shah and Nandalal Sheth
Took advantages of loopholes inbanking system By 1990 Harshad Mehta had risen
to prominence in the stock market.
He had been buying shares
heavily. The shares which attracted
his attention were:
- Associated Cement Co. (ACC),Apollo Tyres, Reliance, Videocon
Tata Iron and Steel Co. (TISCO
) BPL, , Sterlite.
He took the price of ACC from 200
to 9000. Thats an increase of
4400%!!!
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Modus Operandi
Recommendation to
purchase particular
shares on his own
website
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Impact Of Scam On Market
Mehta had by then swindled the banks of a staggering Rs 4,000 crore
On April 23, 1992, journalist Sucheta Dalal exposed Mehta's scam
Bribery case on P. V. Narsimha Rao
Stay on Liberalisation
Holding banks of fake BR had to face losses
BR was removed by RBI
The chairman of the vijaya bank committed suicide.
31st
December 2001- the death of the bullForever remembered as the architect INR 50 billion scam
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Effect on Society
There is no effect on society
Reasons:-
Acts only if it affects
People forget things easily
Government taking things lightly
THUS Within 10 years history repeated
Same things
Same story
Same people
Same Government
Just a new name to blame Ketan Parekh
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Ketan Parekh is a former stock broker
from Mumbai, India
Parekh came from a family of brokers
which helped him to create a trading ring
of his own
He was trainee of Harshad Mehta
He was convicted in 2008, forinvolvement in the Indian stock market
manipulation scam in late 1999-2001
Currently he has been debarred from
trading in the Indian stock exchanges till
2017
Ketan Parekh can be best described as thePied Piper of Dalal Street
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Formed a network of brokers
Identified and targeted 10 stocks
K-10 stock, KP Index
Zee telefilms went up from Rs. 127
to Rs. 2330, Himachal Futuristic Rs. 194
to 2553
When stock prices were high, they were
pledged with banks as collateral
No problems as long prices were rising
Pay order fraud
Issued cheques to MMCB drawn on BOIWent to BOI, SBI, and PNB and got pay
orders discounted
How it happened
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BOI complains to CBI-KP is arrested
Global Trust Bank and Bank of India 's merger failure
SBI's loss was minimal. So it did nothing
MMTC was liquidated ; KP paid its stockholders Rs.400 Crores.
He still owes them Rs. 400 Crores
One of the biggest Fall in BSE -700 pointsKP and other traders were banned from trading for 17 years
Short selling was banned for 6 months.
Badla system was banned
All shares that were put as collaterals should be done so throughNSE and BSE.
Options and Index Future derivatives was introduced
10% additional deposit Margins.
Implications
