Some people call him a thief and for some he is a one who told, how to play in the stock

market. He actually showed the potential of the Indian Stock Market and took it to new heights which were never imagined then. He is none other than Harshad Mehta An Indian stockbroker and is alleged to have engineered the crash in the BSE stock exchange in the year 1992. What all he did: Exploiting several loopholes in the banking system, Harshad and his associates siphoned of funds from inter-bank transactions and bought shares heavily at a premium across many segments, triggering a rise in the Sensex. When the scheme was exposed, the banks started demanding the money back, causing the collapse. He was later charged with 72 criminal offenses and more than 600 civil action suits are filed against him. He died in 2002 with many litigations still pending against him. His early life:

In the early eighties he quit his job and sought a job with stock broker P. Ambalal affiliated to Bombay Stock Exchange (BSE) before becoming a jobber on BSE for stock broker P.D. Shukla.In 1981 he became a sub-broker for stock brokers J.L. Shah and Nandalal Sheth. After he came out of this big struggle for survival he became stronger and his brother quit his job to team with Harshad to start their venture GrowMore Research and Asset Management Company Limited. While a brokers card at BSE was being auctioned, the company made a bid for the same with financial assistance from Shah and Sheth, who were Harshad's previous broker mentors. He rose and survived the bear runs, this earned him the nickname of the Big Bull of the trading floor, and his actions, actual or perceived, decided the course of the movement of the Sensex as well as scrip-specific activities. In April 1992, the Indian stock market crashed, and Harshad Mehta, the person who was all along considered as the architect of the bull run was blamed for the crash. It transpired that he had manipulated the Indian banking systems to siphon off the funds from the banking system, and used the liquidity to build large positions in a select group of stocks. When the scam broke out, he was called upon by the banks and the financial institutions to return the funds, which in turn set into motion a chain reaction, necessitating liquidating and exiting from the positions which he had built in various stocks. The panic reaction ensued, and the stock market reacted and crashed within days.He was arrested on June 5, 1992 for his role in the scam.

In June 1992. . For a few months after the scam.. an editor-turned-MP acting as emcee. who wanted him back in the market. Instead. with the Mehta brothers perjuring themselves. That too fizzled out. He promised the ultimate rags to riches story -. It was a tragic and unceremonious end to the man who was the first broker to become a mega-star of the Indian capital markets and fire the greed and imagination of every middle class Indian in the early 1990s. That too was done in typical Harshad fashion . That was Harshad again willing to revel even in negative publicity. who could not stop trying to pull off the same old quick money schemes. and will forever be known as the main architect of the Rs 50-billion scam . he told me "Congratulations.. it almost seemed as though Harshad and his brother Ashwin would remain at center-stage and dominate events. that asset-creation is not a crime. just before the year 2001 came to a close. you have broken the story of the decade". Within weeks after his release he was hogging headlines as the first man ever to claim that he had bribed a sitting Prime Minister. left behind a shattered dream and a tarnished image. he ended his days as a tired scamster. a la Laloo Yadav's recent jail yatra. or the Amitabh Bachchan / Einstein of the market that were showered on him by his investor fans. his disdain for the means the he employed to achieve his mega ambition. He ended his days in judicial custody. However. Instead of fawning epithets such as the Big Bull. he had told a newspaper in 1992. "I thought I can sell dreams.Harshad Mehta: From Pied Piper of the markets to India's best-known scamster In the wee hours of December 31. that if you wanted to be Harshad Mehta come to the stock market". a fleet of cars and multiple stock exchange memberships.India's biggest securities scandal. "I thought I'd be like Pied Pier". amidst a mob of cheering and slogan-shouting investors. ebullient and recklessly ambitious. Harshad Mehta set out to be a role model for investors.from the small town Raipur boy who was once rusticated from school to Sultan of Dalal Street with all the trappings of wealth such as a fabulous house. high profile conferences at the Taj and the Oberoi. He made a triumphant exit from court. they clearly got themselves a deal to avoid further harassment by other government agencies in charge of money laundering and such offences. Charismatic. igniting another never-ending bull run. when he was released after 107 days in custody. Harshad Mehta passed away in a jail in suburban Mumbai. Did the aftermath of the investigation change Harshad's attitude to business? No way. the release of audiotapes and the bizarre demonstration of Rs 10 million being stuffed into a large suitcase.

Some of the largest newspapers in the country. which he had not declared to the Custodian appointed by government. The problem was that he never changed his formula.among these were BPL. he was convinced that he would never have been caught but for the bear cartel. Typically. Harshad Mehta has never ceased to attempt a comeback. it was his visits to the bank's headquarters in a flashy Toyota Lexus that was the tip off. known as the Damayanti Group to front his market operations. Harshad was also continuously funding himself by selling part of his 1992 stock portfolio. He had struck a deal to ramp up the prices of several stocks . Brokers who operated for Harshad Mehta were then infamously bailed out at the behest of the Bombay Stock Exchange authorities by opening the trading system in the middle of the night to insert synchronized trades at manipulated prices. He also had powerful friends at the helm of the Bombay Stock Exchange with close connections to the regulator. the Lexus had just been launched in the international market and importing it cost a neat package. In fact. it is the sale of these benami shares (shares that were held in street names when he and 19 other entities were notified by the Custodian and their assets impounded) that had put him back in police custody at the time of his death. He had managed to build up quite a speculative bubble and was again the cynosure of investor attention when India's nuclear tests caused a sudden collapse in prices and his bubble burst. Investigations by the Securities and Exchange Board of India have revealed that Harshad had set up an entire network of investment companies. for weeks after the scam. including the Times of India where I first wrote the story of the securities scam. were convinced that a Harshad Mehta column was sure to send circulation figures soaring. He was among the first to set up his own website to dispense tips. If the Central Bureau of Investigation is to be believed. Harshad's problem has always been his flashiness. Those days. 1997 saw Harshad Mehta making another big comeback attempt. That investigation led to SEBI imposing a lifetime bar against him (he had filed an appeal against the SEBI order). He failed to realize that his old magic was not working with investors anymore. In fact. In 1992. This time as a new age stock market guru. At least nowhere near enough to move the market.Almost every year after 1992. . Videocon and Sterlite. Even before that he was featured in a video newsmagazine feeding peanuts to bears at a Mumbai zoo to symbolize his victory over the bear-cartel in the stock market. Harshad did not stop at dispensing tips. He had also built up a network of senior media managers who gave him the publicity and commissioned him as a columnist. when I broke the story about the Rs 6 billion that he had swiped from the State Bank of India.

Mehta and his associates siphoned off funds from inter-bank transactions and bought shares heavily at a premium across many segments. He was later charged with 72 criminal offenses and more than 600 civil action suits were filed against him. But the last decade had certainly taken its toll. Later. Mehta had the replacement cost theory as an explanation. When the end came. The theory basically argues that old companies should be valued on the basis of the amount of money which would be required to create another such company. the family moved to Raipur in Madhya Pradesh after doctors advised his father to move to a drier place on account of his indifferent health. triggering a rise in the Sensex. For those who asked. was replaced by a more pensive and tired visage. He had been buying shares heavily since the beginning of 1990. Harshad Mehta was an Indian stockbroker and is alleged to have engineered the rise in the BSE stock exchange in the year 1992. The shares which attracted attention were those of Associated Cement Company (ACC). the banks started demanding the money back. The sunny optimism and good cheer. [edit] Early Life Harshad Shantilal Mehta was born in a Gujarati Jain family of modest means.000 square feet apartment. He not only looked defeated but sources close to him say that he was steadily running out of funds. Mehta gradually rose to become a stock broker on the Bombay Stock Exchange and lived almost like a movie star in a 15. His early childhood was spent in Mumbai where his father was a small-time businessman. Harshad Mehta was making waves in the stock market. He died in 2002 with many litigations still pending against him. He also had a taste for flashy cars.It is a pity that Harshad's eternal optimism and furious stream of get-rich ideas were never channeled to more productive use. Years had gone by and the driving ambitions of a young man in the faceless crowd had been realised.” write the authors[who?]. But Raipur could not hold back Mehta for long and he was back in the city after completing his schooling. causing the collapse. Exploiting several loopholes in the banking system. he had a score of cases filed under different stages of trial and one conviction by the Special Court in the Maruti Udyog case. When the scheme was exposed. Most of this was probably due to the realisation that with one conviction by the Special Court and another by SEBI. which ultimately led to his downfall.000. his dreams of coming back to the capital market had ended forever. “The year was 1990. The price of ACC was bid up to Rs 10. which had a swimming pool as well as a golf patch. Now it is truly over. .

typically at a slightly higher price. The broker handles neither the cash nor the securities. The broker was dipping illegally into the banking system to finance his buying. they pretended to be undertaking the transactions on behalf of a bank. But. Hence the name .” This the brokers could manage primarily because by now they had become market makers and had started trading on their account. when I broke the story about the Rs 600 crore that he had swiped from the State Bank of India. who passed them to the buyer. the Lexus had just been launched in the international market and importing it cost a neat package.Through the second half of 1991. the seller handed over the securities to the broker. journalist Sucheta Dalal in a column in The Times of India. the seller of securities.e. the buyer and the seller might not even know whom they had traded with. either being know only to the broker. That is. where was Mehta getting his endless supply of money from? Nobody had a clue. The RF is in essence a secured short-term (typically 15-day) loan from one bank to another. who was said to have started the bull run. a BR “confirms the sale of securities. deliveries of securities and payments were made through the broker. Another instrument used in a big way was the bank receipt (BR). 1992. In a ready forward deal. i. On April 23. gave the buyer of the securities a BR. “In 1992. The borrowing bank actually sells the securities to the lending bank and buys them back at the end of the period of the loan. Mehta was the darling of the business media and earned the sobriquet of the ‘Big Bull’. In this settlement process. exposed the dubious ways of Harshad Metha. the bank lends against government securities just as a pawnbroker lends against jewellery…. it was his visits to the bank’s headquarters in a flashy Toyota Lexus that was the tip-off. It promises to deliver . Instead. the borrower. It acts as a receipt for the money received by the selling bank. who then made the payment to the seller. As the authors write. Those days. though that wasn’t the case in the lead-up to the scam. “In this settlement process. Crudely put.” Dalal wrote in one of her columns later. securities were not moved back and forth in actuality. The authors explain: “The crucial mechanism through which the scam was effected was the ready forward (RF) deal. A typical ready forward deal involved two banks brought together by a broker in lieu of a commission.” It was this ready forward deal that Harshad Mehta and his cronies used with great success to channel money from the banking system. while the buyer gave the cheque to the receipt. To keep up a semblance of legality.

Once these fake BRs were issued. did not last long.the banking system had been swindled of a whopping Rs 4. suggest he'll get away lightly. giving tips on his own website as well as a weekly newspaper column. It also states that in the mean time. The money due to the bank was returned. the shares were sold for a profit and the BR was retired.wikipedia.came in handy for this purpose.” Having figured this out. Interestingly. When time came to return the money. Mehta had been convicted in only one of the many cases filed against him. obviously assuming that they were lending against government securities when this was not really the case. a lot of banks were left holding BRs which did not have any value . it is still unknown what was the real story behind the entire scam.000 crore. and how many years of imprisonment he'll get. he was in cahoots with owners of a few companies and recommended only those shares. “Two small and little known banks . Once the scam was exposed. The recent Hindi movie 'Gafla' showed this scam in a different perspective. This time around. The game went on as long as the stock prices kept going up. for a fee. Metha needed banks. Till now. Mehta made a brief comeback as a stock market guru. but why be pessimistic. they were passed on to other banks and the banks in turn gave money to Mehta. maybe India has changed? The point. is that even if Raju is sentenced to jail for the rest of his life. Certainly past history. his family members will continue to live in style. or BRs not backed by any government securities. too.” the authors point out. so it's difficult to say if Ramalinga Raju will be convicted in the Satyam fraud case. This game. Retrieved from "http://en. by the time he died. with cases going back to Harshad Mehta.the securities to the buyer." From Worldcom to Satyam 11-MAY-09 It is early days yet. the seller holds the securities in trust of the buyer. how does it help the investors he's duped — indeed. and no one had a clue about Mehta’s modus operandi. This money was used to drive up the prices of stocks in the stock market. which could issue fake BRs.the Bank of Karad (BOK) and the Metorpolitan Co-operative Bank (MCB) . These banks were willing to issue BRs as and when required. Newsmaker: Nirmal Kotecha 01-MAY-09 Nirmal Kotecha is a self-confessed admirer of Harshad Mehta and a faithful follower of his technique. . however.

a Mumbai-based stock broker. partly due to a last-minute case filed by the stockbroker’s mother. Harshad apartment auctions attract minimal interest 05-FEB-09 Less than half-a-dozen people have evinced interest in buying the eight apartments owned by the late Harshad Mehta and his family. which is occupied by his family in upscale Worli. Mehta and his associates used funds available from inter-bank transactions to buy shares at a premium that contributed to a sharp rise in the Sensex.000 on January 15. somebody’s stolen 2. it had touched 4.000 by the end of March.A K Bhattacharya: The other Satyam question 14-APR-09 Harshad Mehta was the man behind the biggest stock-market swindle in India. . the custodian has put up eight apartments in a complex called Madhuli.60 cr 14-FEB-09 Ashok Samani. He manipulated stock prices by exploiting loopholes in the banking system. Mumbai broker wins bid for Harshad's flats for Rs 32. who can bid higher amount for the Worli property. From 2. The sale has to be approved by the Supreme Court. Rasila S Mehta.6 crore rupees from the A K Bhattacharya: Singh and the Sensex 22-OCT-08 The Sensex rose steeply in early 1992.60 crore. interjected the wife as she glanced through the morning papers in search of trivia and titbit to go with a lazy cup of winter morning tea. Court extends Harshad apartment bid by one more week 06-FEB-09 The special court today extended the bidding for late stockbroker Harshad Mehta's eight apartments for one more week to allow the stockbroker's brother Ashwin Mehta to get more candidates. today won the bids for the eight apartments owned by late Harshad Mehta and his family in upscale Worli by quoting a price of Rs 32. for Subir Roy: What's a crore or two these days? 31-DEC-08 My god. the Bombay Stock Exchange’s benchmark index. 'Big bull' Harshad Mehta's flats up for sale 08-JAN-09 Sixteen years after the stock market scam orchestrated by Harshad S Mehta.

But do these banks run a reputation risk? Hardly Business standard Dalal St took 20 yrs to scale 10K peak 07-FEB-06 The Sensex has taken 20 years to reach the 10.96 on October 4 to 7685. but the flow of household savings into equities has grown over four times in the past year.000-point-mark since it was launched in January 1986. after the October slump .000 on September 8. We demand a JPC probe on the last 21 days of the stock market and the role of Finance Minister P Suman Bery: Animal spirits 11-APR-06 After the recent bullishness sentiment may be about to change.which saw the index drop from 8799.000 crore tax arrears out of the total arrears accumulated over the past several years as these have been found non-recoverableµ by Income Tax Retail investor back. Fast and furious: Sensex took 54 days to kiss 9000 29-NOV-05 The 30-scrip Sensex took 54 trading days to kiss 9000 points after touching 8. Rs 85. in droves 18-SEP-06 Retail investors may have been staying away from the stock market after the May meltdown.64 on .Call rate slips down further to 1. However. Stock market crash: BJP for JPC probe 10-JUN-06 The BJP has demanded a Joint Parliamentary Committee (JPC) probe into the stock market crash. down from yesterdays low of 4 per cent.000 crore tax arrears may be written off 04-JAN-07 The government may have to write off a whopping Rs 85.25 per cent at the close of trading in the money market today. and about 27 years since it was first calculated in 1979. Tamal Bandyopadhyay: Crime and punishment 02-MAR-06 The RBI has acted strictly in penalising banks for violating established norms.25% 31-MAY-07 The overnight inter-bank call money rate fell to 1.

CBI. Warren Buffett offered to dissolve his assetmanagement partnership and return money to his investors. . try NYT 26-SEP-05 Given the emphatic denial by the Prime Ministers Office (PMO) about its role in keeping tabs on the stock market. a public notice put out by the custodian today said. is fast coming up as the centre for trading in financial markets in the north. better known as City Beautiful. Custodian sets deadline for clearing title of tainted shares 07-MAY-05 Failing this. StanChart contest I-T demand in Harshad case 06-JAN-05 State Bank of India and Standard Chartered Bank have contested the demand raised by the Income Tax Department about the recovery of Harshad Mehta scam proceeds. State Bank. no claim will lie against the custodian. the custodain will have the right to sell the uncertified shares after the Chandigarh turns to markets 29-MAR-05 Chandigarh. Profits on the high seas 24-SEP-05 In 1972. near the peak of a massive bull-run.000 crore of tax arrears from the late Harshad Mehta. In other words. chairman and managing director CB Bhave said. Tax dept targets Harshad`s arrears 19-OCT-04 The revenue department is planning to approach the committee of disputes to recover around Rs 1. IB and DRI sleuths were Drawing the line 24-SEP-05 The events of the past few days have demonstrated that theres a big worry in the minds of several people about the sharp run-up in the market.Sunil Jain: Forget CBI. He claimed he couldnt find good businesses at NSDL ups effort to become record-keeper for pension funds 20-AUG-05 The National Securities Depository Ltd. is aiming hard to become the record-keeping agency for pension accounts in the country. along with the taxman. well never get to know if.

clad in hospital whites. He developed chest pain at around 11 pm last night and was shifted to Thane civil hospital where he breathed his last at 12. died at Thane civil hospital early Monday morning. was lodged in Thane Central Jail. was kept on the ground floor of the civil hospital while an inquest was completed in the presence of a local official. . 2004. 47. Reports from Thane said Mehta's body. Andrew Smithers and Stephen Wright (S&W) collaborated in a seminal book called Valuing Wall Streetµ.com/money/2001/dec/31dalal. two sons and two brothers. No amount of cajoling from the finance minister helped the market revert to its astounding run up The side of the FM that you don't know 25-MAY-04 What can you gift a man who commands a Rs 25 lakh crore empire. employs 37 crore people. is survived by his wife.rediff. embroiled in a series of scam cases.Scam recovery payment to I-T dept put on hold 19-AUG-04 The Cabinet Committee on Disputes has withheld the payment of recovery proceeds from the Harshad Mehta case to the Income Tax (I-T) department following an appeal by State Bank of India (SBI) in the Scam recovery payment to I-T dept put on hold 19-AUG-04 The Cabinet Committee on Disputes has withheld the payment of recovery proceeds from the Harshad Mehta case to the Income Tax (I-T) department following an appeal by State Bank of India (SBI) in the Devangshu Datta: Stock takers 19-JUN-04 Just before the dot com bubble burst in mid-2000. fear is writ large on the market's face. and is sitting on foreign exchange reserves worth $116 billion? In short. who hit the headlines 10 years ago in the wake of multibillion-rupee securities scam.40 a. police sources said. what can you give a man who has http://www.m.. Ashwin and Sudhir. Harshad. Mehta.htm 'Big Bull' Harshad Mehta dead 'Big Bull' Harshad Mehta. Are we in a bear hug? 07-JUN-04 After the blood bath on that dreadful Monday of May 17.

However. . The jail doctor S G Kharat gave him first-aid before being taken to civil hospital. On December 21. He was arrested by CBI on November 9 with his brothers. while CBI argued that these shares were sold fraudulently in the market by the accused. In the hospital. Soon after his death. 467 (forgery of valuable security).50 billion from 2. his condition deteriorated suddenly and he soon passed away.7 million 'missing' shares of 90 blue chip companies. He was hale and hearty and was even chatting with the hospital personnel. The police also maintained tight bandobast by deploying additional personnel. they said. Harshad and his two brothers are charged with various offences under IPC such as 120-b IPC (conspiracy). he never had a heart problem earlier. Chief medical officer Dr Sudhir Bakshi and physician Dr R A Chavan attended on him. According to hospital sources. is out of town and has been informed of his father's death. a special court had rejected the bail plea of Harshad and his brothers and remanded them to judicial custody till January 4. his family rushed to the hospital. Police have registred a case of natural death. in the case of alleged misappropriation of Rs 2. The doctors tried to save him by providing artificial resuscitation but declared him dead shortly after midnight. Harshad did his normal exercises for over an hour every day but on Sunday it was extended by 30 minutes. According to doctors and jail sources. Harshad and his brothers contended that it was on the basis of their complaint that the court had earlier ordered CBI to probe the 'missing' shares. 22-year-old Atur. 468 (forgery for the purpose of cheating) and 471 (using as genuine forged documents). he complained of chest pain last night in the central prison here where he was lodged since eight days. Harshad collapsed when the doctor was examining him. According to family sources. Ashwin and Sudhir.Harshad Mehta's son. Doctors at the Thane hospital said Mehta was brought in good health.

Harshad rose to meteoric heights 'Big Bull' Harshad Mehta.In another case. Ashwin and Sudhir. He took over closed companies. rose from an insurance clerk to become one of the most high-profile share brokers till 1992. . Harshad Mehta and three others were acquitted on April 16 in a case of alleged misappropriation of Rs 588. In special courts here and Supreme Court in New Delhi. he was shifted to Thane Central Prison. he exploited bank receipt instruments to the maximum and used the money derived to speculate the share prices of several blue chip companies. including the Standard Chartered Bank. Recently. the government set up Janakiraman Committee to probe the scam. who passed away early on Monday. Following public outcry. From clerk to broker. He is survived by his wife. At least 10 commercial banks. After his arrest Harshad was confined to central prison and other jails in Mumbai. He then rose to become a stockbroker and strove to drive the market to dizzy heights when economic reforms were slowly being unfolded. State Bank of India and National Housing Bank. which broke out between April 1991 and June 1992. according to trade circles.000 from the funds of Bank of America in its inter-bank call money transactions ostensibly with SBI Mutual Fund. pumped in cash and boosted their shares on the stock market. a Reserve Bank of India subsidiary. Harshad perfected the art of diverting money to the stock market from bank's security portfolio by exploiting the loopholes in the system. were hit by the scam. According to CBI. Both the brothers are also facing trial in scam cases. Forty seven-year-old Mehta began his career as a despatch clerk in New India Assurance Company before he transformed the securities market into an active business hub. when the multibillion-rupee securities scam rocked the stock exchanges in the country with a number of banks and financial institutions facing the heat. two sons and two brothers. Harshad was defended by a team of lawyers led by Mahesh Jethmalani.

Ashwin and Sudhir till January four. Harshad and Sudhir were lodged in Thane jail eight days ago.7 million shares held by them were 'missing' or 'stolen' and could not be located.7 million 'missing' shares of 90 blue chip companies. Although Harshad was barred from operating in the market. chairman of UCO Bank K M Margbandhu was sacked . Shares belonging to Harshad Mehta group had been attached by a special court. The 1991-92 scam had sent shock waves all over the country and saw many heads rolling. while Ashwin was admitted to J J Hospital soon after his arrest for treatment of cardiac problem.After the scam. he offered advice to investors on his website. The court ordered a CBI enquiry into the missing shares. He was placed in judicial custody along with his two brothers. All other cases are still pending. he was recently arrested on fresh charge of misappropriating Rs 2. CBI held Harshad and his two brothers responsible for introducing these 'missing' shares in the market surreptitiously in benami (fake) names to rig share prices. raised a controversy by addressing a press conference along with his lawyer Ram Jethmalani by displaying two suitcases in which he claimed to have paid Rs 10 million donation allegedly to the then Prime Minister Narasimha Rao for the Congress party. however.50 billion from 2. Later. Harshad had secured bail in all the cases registered against him. a case was registered against them. However. He. a special court ordered a CBI probe into the allegations made by Harshad Mehta that donations of Rs 10 million from the scam money were indeed paid to Congress. Harshad and his brothers claimed that 2. Accordingly. He was sentenced to five years rigorous imprisonment by justice M S Rane in MUL case although Harshad pleaded that the money had been returned to MUL and the latter saying that it had not lost any amount. Harshad was facing trial in altogether 28 cases but was so far convicted in only one case involving use of Maruti Udyog Ltd funds to the tune of Rs 300 million in the stock market. He had filed an appeal in the Supreme Court which is still pending. However. In the wake of the scam. Harshad was arrested by CBI in several cases registered against him for allegedly cheating banks and financial institutions to the tune of several millions of rupees.

and arrested. . Planning Commission member V Krishnamurthy and SBI managing director V Mahadevan were forced to quit their offices.

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