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Harshad Mehta Scam 1992

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Harshad Mehta Scam 1992

Who is Harshad Mehta?

Harshad Mehta was a well known Indian stockbroker, who was known for his wealth and was charged with numerous financial crimes that took place in the Securities Scam 1992. Out of 27 criminal charges brought against him, Mehta was only convicted to four of them, before his death.

Mehta was engaged in a massive stock manipulation scheme financed by worthless bank receipts. Mehta was convicted for his part in a financial scandal valued at Rs.4999 Crores which took place in the Bombay Stock Exchange by the Bombay High Court and Supreme Court of India. He was married to Jyoti Mehta and they had a son named Atur Mehta.

Harshad Mehta Family:

  • Full Name: Harshad Shantilal Mehta
  • Nick Name: Harshad Mehta
  • Date of Birth: 29th July 1954
  • Birthplace: Paneli Moti, Gujarat, India
  • Death: 31st December 2001
  • Nationality: Indian
  • Occupation: Businessman, Stockbroker
  • Spouse: Jyoti Mehta (m. ?–2001)
  • Children: Atur Mehta
  • Siblings: Hitesh Mehta, Ashwin Mehta, Sudhir Mehta
  • Parents: Shantilal Mehta, Rasilaben Mehta

Life of Harshad Mehta

Harshad Shantilal Mehta was born on 29th July 1954, at Paneli Moti, Rajkot district in a Gujarati family. He spent his childhood days in Khandivali, Mumbai, where his father was a small businessman. Later, his family moved to Raipur, where he studied in Holy Cross Byron Bazaar Higher Secondary School. He did his B.Com studies from Lajpatrai College, in Mumbai.

Career of Harshad Mehta

Mehta started his earning life as a salesperson in the Mumbai office of New India Assurance Company Limited. After a few years, he resigned from this job and joined a brokerage firm as he got interested in the share market. Growing and growing, by 1990, he had risen to a position of prominence in the Indian securities Industry with the media touting him as “The Amitabh Bachchan of the Stock Market”.

He established his own firm called “GrowMore Research and Asset Management”. A huge number of people started to invest in his firm by 1990. He did heavy trading in the shares of Associated Cement Company where the price of the shares in the cement company eventually rose from Rs. 200 to nearly 9000.

He was covered in a cover page article of a number of publications including the popular economic magazine “Business Today”. His lavish lifestyle included a sea-facing 15,000 feet penthouse in the costlier area of Worli complete with a mini-golf course and swimming pool. Besides these, he had luxury cars including a Toyota Corolla, Lexus Starlet, Toyota Sera and many more.

All this straightly implies the level of luxury life Mehta used to live at that time when these types of houses and cars were rarities. People working in his firm included Ketan Parekh who was later involved in his own replicate scam.

Harshad Mehta Scam 1992

Stamp Paper Scam:

Stamp Paper Scam by Harshad Mehta
Stamp Paper Scam by Harshad Mehta

Banks in India were not allowed to invest in the equity markets by early 90s. Mehta by the help of his clever mind squeezed capital out of the banking system to address this requirement of banks and pumped this money into the share market. During his time, a bank had to go through a broker to buy securities and forward bonds from other banks so he took the help of the bank and asked them to transfer the money to his personal account under the deal of buying them securities from other banks. Mehta used this money to buy shares and thus hiking up the demand of certain shares and later selling them off, passing on a part of it to the banks and keeping rest for himself.

Bank Receipts Scam:

During the time period of Mehta, securities were not moved back and forth in actuality. Instead, the seller of the securities gave the buyer of the securities a BR which confirms the sale of securities. It states that the seller holds the securities in trust of the buyer. Mehta was in fond of banks which would issue fake BRs, or BRs not backed by any government securities. Bank of Karad (BOK) and the Metropolitan Co-operative Bank (MCB) shake hands with Mehta, helping him do so. Once these BRs were issued to other banks and the banks, in turn, gave money to Mehta, assuming that they were lending against government securities. The stock market was overheated on the change of the price of shares of ACC.  The day he sold the shares was the day when the markets crashed.

Harshad Mehta Death

Mehta was under Criminal Custody by that time in Thane Prison. Late-night he complained of chest pain and was admitted to the Thane Civil Hospital. He died due to a brief heart ailment at the age of 47, on 31st December 2001. He had a total of 28 cases pending against him.

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