THE BIG BULL : Harshad Mehta Scam

Harshad Mehta was born on 29 July, 1954 at Rajkot, Gujarat. A cricket devotee, Mehta did not appear any uncommon guarantee in school and came to Bombay after his tutoring for ponders and to discover work. Mehta completed his B.Com in 1976 from Lajpatrai college Bombay and worked a number of odd occupations for the another eight year.
He worked at companies like Unused India Affirmation, P Ambalal, PD Shukla, JL Shah, and Nandala Seth.
In 1984, he in conjunction with his brother begun his possess company named “Grow More Inquire about and Resource Management”.

Here the genuine picture begins

He did lobbying of shares.
To get it it way better let’s say he begun making fake request of share within the market. Manipulating the stock to extend the prices tremendously.
This is done by utilizing tipping technique within the market.
Let’s get it superior with an example.
Harshad Mehta circulated a message with offer assistance of diverse offices that stock XYZ could be a purchase at the cost of Rs. 1000 and the target cost is Rs. 2200.
We would ordinarily overlook such messages knowing that it is fake. But the Mehta utilized to contribute colossal reserves into this XYZ Company and attempt making a fake request of this specific stock. As per typical financial matters when request increments and supply remains steady, consequently the costs begin expanding. The costs begin expanding from Rs. 1000 to Rs. 1500, 1700.
Now it is apparent we'll attempt to induce into this stock seeing the increment within the price.
People would contribute at a level where Mehta is approximately to pull back the funds by offering the shares.
Let’s say he pulled back at a rate of Rs. 2000, individuals would contribute presently considering it'll reach 2200. As Mehta offers a expansive number of shares specifically affecting the costs and the cost falls tremendously.
This way he earned a tremendous sum of money.
From the illustration itself it is evident he made venture at Rs.1000 and sold that at Rs. 2000, basically making it 2 times of the venture.
He has invested in many companies like Apollo Tires, Reliance, Tata Iron and Steel, BPL, Videocon, ACC.
When he invested in ACC, its share price increased from Rs. 200 rupees. 9000
If you simply calculate it, it is 4500% of the reward. Think about how much money it costs to do this.
He has created a reliable image in the market and is also known as Amitabh Bachchan in the market.

BR - It means a promissory note issued by a bank to a debtor for the purpose of obtaining securities and loans in exchange for shares.

Harshad Mehta was the broker in between the different banks.
Bank B needs money and decides to sell its government bonds to the broker.
Now the broker goes to Bank A, collects the money in his name and promises to collect the collateral.
He kept both He also named Bank C and Bank D the same. Publish fake bank receipts when necessary.
In this way, forward-looking business chains continue to expand the planning series. The bank receipt confirms the sale of the collateral and shows that the collateral is held by the seller as escrow on behalf of the buyer. It also provides a receipt from the bank.
Bank of Karad (BOK) and Mumbai Merchant Cooperative Bank (MCB) helped him issue fake receipts.
This situation continues to expand and counterfeit receipts are being issued on a large scale.
Since it is one of the highest taxpayers, it also has the power to control BSE.
According to RBI rules, lending banks are always supposed to give the loan in the borrower's name, but this does not happen. The money was deposited in the name of Harshad Mehta. After the trick was uncovered, a few lawmakers, counting RBI Representative S. Venkitaramanan, brokers like Pallav Sheth and Ajay Kayan, and commerce individuals like Aditya Birla, came beneath fire. The political climate too got to be more charged after Harshad Mehta gave a press conference in which he attested that he had paid P.V. Narasimha Rao, India's Prime Serve at the time, Rs. One crore to evacuate himself from the trick case.
The CBI confined Harshad Mehta in November 1992, and was afterward charged with 72 criminal offenses and more than 600 other budgetary and banking-related offenses. After three months, he gotten safeguard after holding the administrations of eminent lawyer Smash Jethmalani. Once more, in 1999, the Bombay Tall Court found Harshad Mehta blameworthy of the Maruti Udyog Trick and sentenced him to five a long time in jail.
This kept on going until 23rd April, 1993 when a writer Sucheta Dalal went into profound investigate approximately the same and uncovered the Mehta trick. She did a foundation ponder approximately the colossal increment in share cost within the advertise and composed a column in TOI.
• Sensex drop from 4500 to 2500 loosing Rs. 1,00,000 crore in advertise capitalization (O/s shares *CMP).
• Progression arrangements were put on hold by the GOI.
• Indian companies confronted trouble in organizing capital.
• BR were expelled by RBI.
• Stock showcase crash badly.
• There was a misfortune of Rs. 3000 crore to the banks.
• SEBI delayed endorsing of private segment common funds.
• SEBI prohibited Harshad from contributing in stock showcase forever.
• Naked brief deals (borrower and moneylender being unconscious almost each other) was prohibited in 2001.
• GOI passed “SEBI Act 1992” post Mehta trick after adjusting the escape clauses of the existing SEBI Act. This was too known as “Harshad Mehta Act 1992”.

The budgetary embarrassment esteemed around Rs. 5000 crore in add up to. Key shortcomings of the case:
1) The escape clauses within the managing an account system.
2) BSE exchange system.
3) SEBI presented modern rules to cover the escape clauses within the existing ones.
On 31st Dec 2001, Harshad Mehta passed on whereas being into the care.
Movies/Series of Harshad Mehta : GAFLA, SCAM 1992, THE BIG BULL, THE BULL OF DALAL STREET
Here is the list of 28 exciting movies for business enthusiasts to watch
1. The Big Short (2015)
2. Wall street (1987)
3. Trading places (1983)
4. Boiler Room (2000)
5. Equity (2016)
6. Freakonomics (2010)
7. Inside Job (2010)
8. Glengarry Glen Ross (1992)
9. The wolf of wall street (2013)
10. Floored (2009)
11. The China Hustle (2018)
12. Margin Call (2011)
13. Baazaar (2018)
14. Enron (2005)
15. Margin Call (2011
16. Rogue Trader (1999)
17. Chasing Madoff (2011)
18. The Ascent of Money (2008)
19. Too Big to Fail (2011)
20. The Corporation (2003)
21. Billion Dollar Day (1985)
22. Banking On Bitcoin (2017)
23. Barbarian at the gate (1993)
24. American Psycho (2000)
25. Money Monster (2016)
26. Arbitrage (2012)
27. Wall Street Warriors (2006)
Similar Article : BPL : The Harshad Mehta connection, Harshad Mehta : From Pied Piper of the markets to India’s best-known scamster, The satyam scam, Sterlite and Videocon : The Harshad link,

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