In order to exchange publicly listed shares at specified times of the day, buyers and sellers congregate on a platform called the stock market. Share market and stock market are phrases that are sometimes used synonymously. But the main distinction between the two is that while the former is only used to trade shares, the latter allows you to trade a variety of financial instruments, including bonds, derivatives, FX, etc. National Stock Exchange (NSE) and Bombay Stock Exchange (BSE) are the country's two main stock exchanges. An enormous stock market fraudster like Bernie Madoff or a successful business with shares that increase 20% annually are more appealing to a newspaper editor, right? The con artist naturally receives media attention. similarly true with insider trading. Insiders who progressively increase shareholder wealth over decades of excellent management will go unnoticed while a major insider trading scandal grabs headlines. In the end, the public's perception of the market is negatively impacted by the media's portrayal of the market as having a greater number of fraudsters and liars than there actually are. Films, whether it be Wolf of Wall Street, Wall Street, or Boiler Room, have a tendency of presenting the market as one huge, fixed party, but only for those who are in the know or who are willing to get around the rules. Even while The Big Short demonstrated that thorough research may result in significant financial gains, the majority of the characters were still presented as greedy con artists, and the protagonist only truly became wealthy while everyone else was suffering greatly as a result of the financial crisis. Again, brokers and advisors simply don't come across properly, which makes the average investor anxious about the morality of potential money managers. Investment losses are commonplace. It's just a feature of the game. However, if you can place the responsibility elsewhere or on the system itself, it is obviously far simpler to accept a defeat. Therefore, investors find it simpler to assert that "the market is rigged to work against me" rather than "I made a mistake and never should have bought that stock. One of the top 5 stock markets by market capitalization is the Indian stock market. Almost $3.21 trillion is the total market value of the Indian stock market. Greed will always entice wrongdoers to commit scams and frauds in a situation where there is so much money changing hands. List of the biggest stock market frauds in India may be found on this blog.
Fraud by Harshad Mehta
It was discovered in 1992
Harshad Mehta and some bank workers were the main offender(s). Cost: 4,000 crore Other names: 1992's Scam of Indian Stock Markets, Securities Scam The Harshad Mehta Scam is arguably the largest fraud committed in India in the history of the stock market. A well-known broker named Harshad Mehta conspired with bank workers to influence the Bombay Stock Exchange (BSE).
Harshad Mehta and some bank staff allegedly had phoney bank receipts (BRs) generated, which they then used to convince other banks to lend him money by claiming to be lending against securities (g-secs). Fake bank receipts have almost no value, while government securities are thought of as credit-risk-free debt instruments.
In order to manipulate stock prices, Harshad Mehta defrauded banks out of a total of 4,000 cr.
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The Ketan Parekh
Fraud Year it was discovered: 2001
Ketan Parekh is the principal offender. Price: 40,000 crore N.A. is another name. The only scam that has a chance of challenging the Harshad Mehta Scam for the title of largest stock market fraud in India is the one committed by Harshad Mehta's protege, Ketan Parekh.
Ketan Parekh, a stockbroker, engaged in circular trading using funds he had acquired from banks and other financial institutions. Circular trading occurs when a group of people join hands and trade a script among themselves to create a false notion of high trading volumes to increase stock prices.
UTI Scam Information was discovered in 2001.
Unit Trust of India is the principal offender.
Minimum 1,800 crores.
N.A. is another name.
The Unit Trust of India (UTI) was created in 1963 as a result of a government act, and it held a mutual fund monopoly for nearly 24 years. With 6,700 crore in assets under control in 1988, UTI had successfully built a large client base throughout its 24 years of monopoly.
The assured return schemes (ARS) that UTI launched at the centre of this fraud lacked an acceptable guarantee. If a mutual fund guarantees a specific rate of return but lacks the capital to deliver those returns, then such guarantee is useless.
Stock prices were falling in 2001 because of the Ketan Parekh scam and other issues. Investors were prompted to redeem their UTI units as a result. The increasing number of investors who wanted to redeem their UTI units created a tremendous amount of pressure on UTI because the price of the units was fixed arbitrarily and was higher than the actual value of the assets.
Retail investors were further hurt by the fact that SBI and ICICI, two of the biggest investors, had representatives on the board of UTI. Large investors were able to exit because of this before others were aware of the UTI situation. The UTI board resolved in July to stop redemption and deny unitholders for one of its schemes for the ensuing six months. Since then, SEBI has strengthened regulations for mutual funds to ensure returns; as a result, a mutual fund must now establish a guarantee if it promises to generate a particular amount of returns.
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