Millennials are talking about financial rogues at the moment, and Scam 1992 is the most recent addition. The new SonyLiv shows based on the book The Scam: Who Won, Who Lost, Who Got Away written by two journalists, Sucheta Dalal and Debashish. It is about the famous economic fraud by Harshad Mehta.
In 1992, Harshad Mehta committed India’s biggest stock market scam. It caused the stock market to crash.
At the time of his arrest, Harshad was a celebrity stockbroker. However, he was a man with a tame origin. He was not good at school, and earlier did odd jobs such as selling cement, hosiery, etc.
His story began in 1980, where he started a lower level clerical job at Harjivandas Nemidas Security, a brokerage firm. The firm used to work with gigs as a middle-man with no prominence position. However, Harshad managed to rose through ranks. By 1990, he was known as the Amitabh Bachchan of the Stock Market. He had a flashy lifestyle with a sea-facing 15,000 sq ft penthouse in Worli consisting of a mini-golf course, swimming pool, and fancy car fleet.
However, the Money Came From Over 1000 crore Fraud from the Indian Banking System to Buy Stocks on BSE.
Harshad Mehta received securities from SBI against the forged checks of corrupt officials and failed to deliver the securities. Then, he made the stocks surge prices via fraudulent practices and sold the stocks he owned in these firms. As a result, lakhs of families loss their money with a sharp fall in the share prices. The market index fell from 4500 points to 2500 points with a loss of 100,000 crore INR in market capitalization.
The 1992 fraud was the equity market scam where Harshad Mehta put his money in bubble stocks that lost value by more than 95%. Mehta is also involved in the Ready forward deal scam, where he gets checks issued in his name instead of the bank, and the bank received fake receipts.
Harshad Mehta also surges the price of ACC to 9000 INR from 200 INR in a short time. It also led to a 4400% surge in several other stocks, and the market crashed when he sold the stocks.
On 23 April 1992, a journalist named Sucheta Dalal exposed Mehta’s illegal machination via a newspaper article (1). Because of the scam, the index took a dive that the market had ever seen.
Several banks and individuals were connected in these scandals with Harshad Mehta. Notably, the Supreme Court convicted Mehta for his part in the scandal valued at 49.99 INR billion.
To prevent further scams, the government did a complete restructuring of the Indian Financial System.
In 2001, Harshad Mehta died of a heart attack while in custody. He still had 28 cases pending against him at the time of his death.
That’s the story of the man behind the biggest stock scam of India.