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5 financial scams that shocked the markets

August 16, 2013 13:40 IST

5 financial scams that shocked the markets

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The NSEL crisis has wiped out hundreds of crores of many investors. 

The episode also shows how manipulation, lack of knowledge and greed can cause big losses to investors and pose a threat to the financial system.

Here is a snapshot of some of the biggest scams that the country has witnessed over the years.

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Image: Activists hold a cartoon placard during a protest in New Delhi
Photographs: Parivartan Sharma/Reuters
Tags: NSEL

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Harshad Mehta scam

Harshad Mehta siphoned off funds amounting to Rs 4,000 crore (Rs 40 billion) from various banks to manipulate stocks in the early 1990s.

The scam was exposed as the markets crashed, and banks and investors lost huge amount of money. He died in 2001.

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Image: Activists hold a cartoon placard during a protest in New Delhi
Photographs: Parivartan Sharma/Reuters

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5 financial scams that shocked the markets

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Roop Bhansali scam

Chain Roop Bhansali collected money from the public through mutual funds, fixed deposits and debentures.

He also raised funds through non-existent companies and transferred the money to shell companies or others who invested with him.

The scam came to light when he could notraise more money. The scam resulted in a loss of Rs 1,100 crore (Rs 11 billion).

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Image: Roop Bhansali (inset)
Photographs: Reuters

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Ketan Parekh scam

Ketan Parekh was involved in circular trading and stock manipulation through 1999-2001 in a host of companies.

Like Mehta, he borrowed from banks such as Global Trust Bank and Madhavpura Mercantile Co-operative Bank, and manipulated a host of stocks popularly known as K-10 stocks.

Parekh has been banned from the stock market.

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Image: File photo of Ketan Parekh (R) escorted into a courtroom by Central Bureau of Investigation officers in Mumbai.
Photographs: Reuters

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Satyam scam

Ramalinga Raju confessed he had cooked up the accounts of Satyam Computers and  that the cash and bank balances were inflated by Rs 5,040 crore (Rs 50.40 billion), after a failed attempt to acquire Maytas.

He was recently released on bail. Satyam Computers has since been acquired by Tech Mahindra.

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Image: File photo shows Ramalinga Raju (C), founder and former chairman of fraud-hit Satyam Computers, being escorted from a court in Hyderabad.
Photographs: Krishnendu Halder/Reuters

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Saradha group scam

The Saradha group ran a wide variety of collective investment schemes that collected money from the public.

The ponzi scheme collapsed and caused an estimated loss of Rs 4,000 crore (Rs 40 billion) with 1.4 million investors affected, mostly small savers. The Union government launched a multi-agency probe to investigate the scam.

Sudipta Sen,  promoter of Saradha group  is the key accused in the scam.


Photographs: Sudipta Sen

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