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PRESENTATION ON STOCK MARKET SCAMS IN INDIA (1991 onwards)

PRESENTED TO: PRESENTED BY:DR. D. D.ARORA SACHIN(PROFESSOR) ROLL NO. 11Ms. SHILPYCONTENTSIntroduction of stock marketMeaning of stock exchangeHistory of indian stock marketMeaning of security scamType of security scamStock market scams in indiaGuidelines for regulations of financial marketReferences

INTRODUCTION OF STOCK MARKET A stock market or equity market is the aggregation of buyers and sellers (a loose network of economic transactions, not a physical facility or discrete entity) of stocks (also called shares); these may include securities listed on a stock exchange as well as those only traded privately.

Meaning of stock exchange A stock exchange is a place to trade stocks. Companies may want to get their stock listed on a stock exchange. Other stocks may be traded "over the counter", that is, through a dealer. A large company will usually have its stock listed on many exchanges across the world. Exchanges may also cover other types of security such as fixed interest securities or indeed derivatives.At present there are 23 stock exchanges in India.

History Of Stock Market Indian stock market marks to be one of the oldest stock market in Asia. It dates back to the close of 18th century when the East India Company used to transact loan securities. In the 1830s, trading on corporate stocks and shares in Bank and Cotton presses took place in Bombay. Though the trading was broad but the brokers were hardly half dozen during 1840 and 1850. . The informal group of stockbrokers organized themselves as the The Native Share and Stockbrokers Association which, in 1875, was formally organized as the Bombay Stock Exchange (BSE).

Meaning of security scamScams have been occurring in stock markets across the world at regular intervals and these have resulted in people loosing their huge capitals invested in various type of securities. Stock market scams are also called securities scam as different types of securities are traded in stock market. Stock market scams are result of various type of manipulations and other processes carried out by investors and traders at various level.Types of security scamBrokerage misguidanceTechnology fraudsMarket manipulationsSTOCK MARKET SCAMS IN INDIA (1991 Onwards)THE 1992 SECURITY SCAMHarshad M Mehta was an Indian stockbroker, well known for his wealth and for having been charged with numerous financial crimes that took place in 1992. It was alleged that Mehta engaged in a massive stock manipulation scheme financed by worthless bank receipts, which his firm brokered in "ready forward" transactions between banks. The instrument used by him was the bank receipt(BR). The seller of securities, gave the buyer of the securities a BR. As the authors write, a BR "confirms the sale of securities. It acts as a receipt for the money received by the selling bank. "Two small and little known banks the Bank of Karad (BOK) and the Metropolitan Co-operative Bank (MCB) came in handy for this purpose.BHANSALI SCAM (1995) Businessman Chain Roop Bhansali invited investments in his financial outfits. The Bhansali scam resulted in a loss of over Rs 1,200 crore (Rs 12 billion). He first launched the finance company CRB Capital Markets, followed by CRB Mutual Fund and CRB Share Custodial Services. He ruled likefinancial wizard 1992 to 1996 collecting money from the public through fixed deposits, bonds and debentures. The money was transferred to companies that never existed. CRB Capital Markets raised a whopping Rs 176 crore in three years. In 1994 CRB Mutual Funds raised Rs 230 crore and Rs 180 crore came via fixed deposits. Bhansali also succeeded to rise about Rs 900 crore from the markets.KETAN PAREKH SCAM (2001)In Spite of the recommendations made by the Janakiraman Committee Report in 1992 to prevent security scams from happening in the future another security market took place in 2001. This involved the actions of one major player by the name of Ketan Parekh. Hetargetedsmaller exchanges like the Allahabad Stock Exchange and the Calcutta Stock Exchange, and bought shares in fictitious names. Ketan borrowed Rs 250 crore from Global Trust Bank to fuel his ambitions. Ketan along with his associates also managed to get Rs 1,000 crore from the Madhavpura Mercantile Co-operative Bank.Satyam scam (2009)Satyam computer was founded in 1987.It converted into public limited co. In 1992.Ramalinga Raju was the chairmen of the company that time. He mislead various investors. He transferred his money to mayas co. ltd. On 22 jan. 2009 CID told to court that there is 40000 employees not 53000 as reported by company. The company's balance sheet as of September 30 carries "inflated (non-existent) cash and bank balances of Rs 5,040 crore (as against Rs 5,361) crore reflected in the books. On 5 February 2009, the six-member board appointed by the Government of India named A. S. Murthy as the new CEO of the firm with immediate effect.

NSEL SCAM (2013)An innocuous-looking notification from the Forward Markets Commission (FMC) came in on July 12, 2013. And in the offices of the National Spot Exchange Limited (NSEL), a commodities exchange promoted by the Jignesh Shah-led Financial Technologies (FinTech), things began to change.There are rules governing commodity trading, which is regulated firmly by the Forward Market Commission (FMC). Under the Forward Contracts Regulation Act, any contract that is called spot must be settled within 11 days that is, both delivery of goods and transfer of money must happen within 11 days (called T+11). The 11 days give the buyer and seller time to complete the contract. Thus, this would then not become a forward contract. This also includes ponzi scheme.

GUIDELINES OF SEBI FOR REGULATION OF FINANCIAL MARKETProhibition of certain dealing in securitiesProhibition against market manipulation.Prohibition on unfair trade practice relating to securities.CONCLUSION In conclusion we can say that inspite of government actions for regulations of scams, stock market scams are becoming quite common in present time.it is because that govt. Does not take action at right time. Secondly , the SEBI should be provided with more power to take actions against such companies.THANK YOU