Harshad Mehta Scam

Comparative Analysis of Both Scams

Sources: http://flame.org.in/knowledgecenter/scam.aspx
Impact on Stock Markets and Indian Economy
● The immediate impact of these scams were
sharp fall in the share prices and indices
● Post Harshad Mehta Scam, markets lost Rs.
0.1mn crore loss in market capitalisation
● The Government’s liberalization policies came
under severe criticism
● Subsequently, these policies were put on hold
for a while
● SEBI, the securities market regulator,
postponed sanctioning of private sector mutual
funds
● The entry of much talked about foreign
pension funds and mutual funds became the
remotest possibility
● The Euro-issues planned by many Indian
Cos. Were delayed

Sources: http://www.slideshare.net/
Measures taken by SEBI against scams
● Securities and Exchange Board of India (SEBI) was established in April ’88
● Established with an objective of protecting the rights of small investors and
regulating and developing the stock market in India
● Post Mehta Scam in 1992, the GoI passed “SEBI Act 1992” and conferred statutory
powers to it
 Action Taken By SEBI
● While Mehta scam empowered SEBI to regulate markets more effectively, several
other scams forced it to ensure that markets operate transparently and efficiently
● However, post Mehta scam, several scams came to light, casting doubt on the
efficiency of SEBI as a regulatory body
● Although many reforms are introduced by SEBI, there remains significant lapses in
the law implementation and enforcement
● Certain areas wherein SEBI needs to think upon and take action
includes:
─ Bear/Bull Cartels
─ Insider Trading
─ Circular Trading
─ Uniform settlement cycle
● A few actions taken by SEBI were criticized of it being clueless about its
supervisory duties

● Its high time that market regulators implement appropriate measures else the
ghost from past will continue haunting the Indian bourses
Thank You