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Securities Scam Essay

706 Words3 Pages

An ethical perspective of the Securities scam The Backdrop: - The securities scam was a scam which was unearthed in 1992 in which Gujarati business man called Harshad Mehta got entangled. Harshad M Mehta was then charged with numerous financial crimes that took place in 1992. He got charged with 27 crimes and got convicted for one. Using ready forward transactions between banks Mehta indulged in massive swindling in the Indian financial markets. He was convicted by the Indian Supreme court for swindling banks by a value of 49 Billion USD. The scam exposed the deficiencies in the rules framed by the Bombay Stock Exchange (BSE) transaction system and SEBI. He died in 2001 after spending 9 years in jail. First reports indicated that there were shortfalls in the government and public bonds held by SBI. Within a month it was understood that it was a scam where there were missapropriations worth …show more content…

Once the scam was uncovered, though, a lot of banks were left with empty coffers as they held BRs with no value– in short $40 Billion USD was swindled. When the scam was exposed, the Chairman of the Vijaya Bank committed suicide since he knew his fate would be sealed once people got wind of his involvement in the scam. M J Pherwani of UTI was also linked to Mehta. Mehta and his associates swindled many banks using interbank transactions and bought many shares cheaply. When the scheme was exposed, banks started demanding their money back, thus causing a big collapse in the markets. He was charged with 72 offences and more than 600 offences were filed. He was arrested and was never allowed to enter the stock market circles. Mehta and his associates were arrested by the CBI on 9 November 1992 for allegedly misappropriating more than 2.8 million shares (2.8 million) of about 90 companies, including ACC and Hindalco, through forged share transfer forms. The total value of the shares was placed at 2.5

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