1992 securities scam
The 1992 Indian stock market scam was a market manipulation carried out by bankers and politicians on the Bombay Stock Exchange. The scam caused significant disruption to the stock market of India, with over one billion USD defrauded. The scope of the scam was so large that the net value of the stocks was higher than the health budget and education budget of India. The investigation was launched by the Supreme Court of India and found to be a miscarriage of justice.
About 1992 securities scam in brief
The 1992 Indian stock market scam was a market manipulation carried out by Harshad shantilal Mehta and other bankers and politicians on the Bombay Stock Exchange. The scam caused significant disruption to the stock market of India, with over one billion USD defrauded. The 1992 scam was the biggest money market scam ever committed in India. It was a systematic stock fraud using bank receipts and stamp paper which caused the Indian Stock market to crash. It exposed the inherent loopholes of the Indian financial systems and resulted in a completely reformed system of stock transactions and an introduction of online security systems. The scope of the scam was so large that the net value of the stocks was higher than the health budget and education budget of India. An interview with Montek Singh Ahluwalia revealed that many top bank officials were involved. The impact of the scams had many consequences, which included the loss of money to lakhs of families and the immediate crash of theStock market. The index fell from 4500 to 2500 representing a loss of Rs. 1000 billion in market capitalisation. This rapid fall was the largest the stockmarket had ever seen. The scammers were caught out by the Indian public, who were outraged by the fraud and demanded an investigation into the scam. The investigation was launched by the Supreme Court of India and found to be a miscarriage of justice.
The case against the scam has been dismissed by the Bombay High Court, which ruled in favour of the investors. The court also ruled that the scam had no legal basis and that the banks were not responsible for the losses caused by the scam, as they had not been involved in any way in the scheme in the first place. It also found that the fraud had been committed by a single individual, not by a group of bankers or politicians. The main perpetrator was stock & money market broker Harshad Mehta, who was known for manipulating stock prices. He secured securities from the State Bank of India against forged cheques signed by corrupt officials and failed to deliver the securities. This resulted in stocks like ACC, which was trading in 1991 for ₹200share, catapulting to nearly ⁹9,000 in just 3 months. Since he had to book profits in the day when the markets crashed, the day he sold the stocks he was the one who made the most money. He used this money temporarily in his account to buy shares, hike up demand of certain shares dramatically, sell them off, pass on a part of the proceeds to the bank and keep the rest for himself. He took the price of ACC from an ₳200,000 to ₾,000. This was an increase of 4,400%, which was tied into the overheating of the stock Market.
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This page is based on the article 1992 securities scam published in Wikipedia (as of Jan. 04, 2021) and was automatically summarized using artificial intelligence.
