A STUDY OF FRAUDS IN INDIAN CAPITAL MARKET

ABSTRACT

A capital market is a financial market in which long-term debt or equity-backed securities are bought and sold. India has witnessed major financial frauds almost every year since 1990s. There is well documented history of frauds in the financial markets starting from the (in)famous securities scam by Harshad Mehta (1992),MS Shoes (1995),CRBhansali(1996),Ketan Parikh Scam(2001),DSQ Software Scam (2001), IPO Demat Scam(2006),Vanishing Companies (2007),Satyam (2008), Home Trade (2010),Sahara India pariwar Investor fraud (2010), Home Trade(2010),ULIP Misselling(2011),Saradha Group Financial Scandal (2013), NSEL Scam (2013), PACL ponzi scheme scam(2014). Scams have led to regulatory reforms, forming new institutions and strengthening the institutional framework. This paper studies the role of stock exchanges and SEBI to protect investor interests and to promote fair and orderly securities markets. The study attempts to examine the role of SEBI by ensuring the integrity of markets by detecting market frauds on a proactive basis, investigating abusive, manipulative or illegal trading practices in Indian Securities Markets. The role of market surveillance in ensuring integrity of markets by enabling a safe and sound environment is further examined in this paper.

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