Stock market has remained one of the favorite investment choices for the public for a long time. It has created wealth for many investors, returning good yields from their investment. However, there were times when fraudsters conned the investors and fooled the market causing irreversible and irreplaceable damage and those stories are told for years to come.
In this article, we will give you a bird’s-eye view of some fraudulent activities that were so impactful that when discovered, they shook the stock market. This caused adverse effects on its normal functioning and on the finances of the investors, diminishing the value of the system on the whole.
|Scam||Nature of Industry||Fraud Perpetrators||Year||Modus Operandi|
|Harshad Mehta scam||Capital market||Harshad Mehta||1992||
|CRB scam||Capital Market||C R Bhansali||1996||
|Ketan Parekh scam||Capital Market||Ketan Parekh||2001||
|UTI scam||Mutual Fund||Chairman, Executive Director, Stock Broker||2001||
|Satyam Scam||IT Company||Auditor,
|Sahara scam||NBFC||Subrata Roy||2009||
|Saradha Chit Fund scam||Ponzi scheme||Sudipta Sen||2013||
*NSEL, a company that provided an electronic platform to farmers and traders for spot trading in farm products and bullion among others
|PACL scam||Ponzi scheme||MD, Promoters, Directors||2014||
|Co-location scam||Capital Market||Officials of NSE, Brokers||2015||
source: UGC research paper on Fraudulent Financial Practices and Investor Protection
Other notable frauds in the stock market that made headlines are:
- Mishka Finance and Trading Limited – IPO Fraud: 2013-14
- Rakhi Trading Case & Ors-Reversal Trades in F&O: 2007/2014-15.
- Eco-Friendly Food and Esteem Bio Organic – LTCG/Penny Stock Fraud
- WhatsApp Leak Case – Mass Insider Trading Case of 2017
With the advent of technology, new age scams like social media scams are surfacing. When fraud surfaces, its impact goes a long way affecting the retail investors’ confidence in the stock market, preventing the stock market to reach its full potential, sometimes bankrupting the investors leading them to take extreme steps among others.
Although SEBI, along with other intermediaries, is striving to safeguard the integrity of the stock market and protect the investors, fraudsters still find a way to fool the system. As an investor, you must be cautious and take necessary measures to not fall prey into the hands of scamsters.