Who is Harshad Mehta?
Harshad shantilal mehta was born on 29 July 1954,at moti
paneli,Rajkot district,in Gujarati Jain family. Mehta completed his B.com in
1976 from Lajpatrai college Mumbai and worked a number of odd jobs for next
eight years.
His financial condition was very poor, but his dream is too big. He want to became rich very quick. During this time he got interested in share market and after a few years, resigned and joined a brokerage firm.
His financial condition was very poor, but his dream is too big. He want to became rich very quick. During this time he got interested in share market and after a few years, resigned and joined a brokerage firm.
Over a period of 10 years, beginning 1980, he served in
positions of increasing responsibility at a series of brokerage firms. He was most well-known person at that time.
In 1984, Mehta was become a member of Bombay stock
exchange as a broker. He established his own firm called GrowMore Research and
Asset Management, with the financial assistance of associates.
He actively started to trade in 1986. By early 1990, a
number of eminent people began to invest
in his firm. And utilize his services.
During this period, especially in 1990-1991, the media
portrayed a heightened defined image of mehta, calling him “The Big Bull”.
Up to the early 90s, banks in India were not allowed to
invest in equity markets. Mehta cleverly manipulate capital out of the banking
system to address this requirement of banks and put this money into the
share market.
How did Harshad Mehta commit the Scam?
He also promised the banks higher rates of interest, while
asking them to transfer the money into his personal account, under the guise of
buying securities for them from another banks.
At that time, a bank had to go through a broker to buy
securities and forward bonds from other banks. So that Harshad mehta work as a mediator for the banks.
He used in a big way was the bank receipt(BR). He used fake bank receipt for selling securities.
Instead, the borrower, i.e. the seller of securities, gave
the buyer of the securities a BR. The BR confirms the sale of securities. It
act as a receipt for money received by selling bank. It promises to deliver the securities to buyer. It also states that, the seller holds the securities in trust of the buyer.
Harshad gives fake BR to the Buyer as broker and take money. He manipulate the share market by using this money. By this he fluctuating the price of shares in share market. He was increase the price of share in very short term.
How Harshad Mehta Exposed?
On 23 April 1992, journalist Sucheta Dalal exposed Mehta’s illegal
method in column in The Times of India. Sucheta Dalal reveals Mehta’s Scam.
A typical ready forward deal involved two banks brought
together by a broker in lieu of commission. The broker handles neither the cash
nor the securities. Though that wasn’t the case in the lead-up the scam.
When the scam was exposed, banks started demanding their
money back, causing the collapse. He was charged with 72 criminal offences,
and more than 600 civil action suits were filled against him.
Mehta and his brothers were arrested by CBI on 9 November
1992 for allegedly misappropriating more than 2.8 million shares of about 90
companies, Allegations of payment of bribe to India’s prime minister.
Mehta was under Criminal custody in the Thane prison, Mehta
complained of chest pain at night and was admitted to the Thane civil Hospital.
He died a brief heart ailment, at the age of 47, on 31 December 2001.
Market watchdog, Securities and Exchange Bored of India had
banned him for life for stock market related activities.
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