“Malpractices Of Harshad Mehta, Ketan Parekh Era Are Back”: Industrialist Harsh GoenkaIn a recent social media post on X, industrialist Harsh Goenka sounded an alarm about resurfacing malpractices reminiscent of the Harshad Mehta and Ketan Parekh era in India’s financial markets. Expressing concern over a surge in stock market manipulations, particularly in Kolkata, Goenka highlighted the risks posed to small investors. He urged regulatory authorities like SEBI and the Finance Ministry to intervene promptly to investigate and prevent potential losses.
The call for vigilance comes amidst a turbulent period for the Indian stock market, with major indices witnessing a sharp decline. Yesterday, the BSE Sensex plummeted nearly 1,000 points intraday, while the NSE’s Nifty dropped by over 200 points, causing concerns among investors.
“With a booming stock market, all the malpractices of Harshad Mehta/Ketan Parekh era are back primarily in Kolkata. Promoters are inflating profits (through profit entry) and in nexus with Gujarati-Marwari brokers driving their stock prices to unrealistic levels. It’s time for SEBI and Finance ministry to step in and investigate before small investors suffer severe losses,” Mr Goenka wrote.
Harsh Goenka, Chairman of the RPG Group, is a respected figure in India’s business circles. Under his leadership, the conglomerate has achieved significant success and innovation across various sectors, including power, infrastructure, tyres, IT, and healthcare.
Additionally, the RPG Group’s recent financial performance indicates both challenges and opportunities. While its tyre company, CEAT, reported a decline in net profit for the January-March 2024 quarter, the conglomerate’s overall net worth has witnessed a notable increase. Goenka’s leadership philosophy, emphasizing innovation, sustainability, and social responsibility, reflects his commitment to driving growth while ensuring ethical business practices and community development.
Ketan Parekh scam
The Ketan Parekh scam of the late 1990s and early 2000s exposed the vulnerabilities in India’s financial system, highlighting the dangers of speculative trading and market manipulation. Ketan Parekh’s fraudulent practices, including stock price manipulation and circular trading, artificially inflated stock prices and destabilized the market. The aftermath of the scam prompted regulatory reforms and increased oversight to prevent similar incidents in the future. It underscored the importance of transparency, accountability, and ethical conduct in financial markets. While the episode inflicted short-term damage on investor confidence, it ultimately led to strengthened regulatory mechanisms and a renewed focus on integrity, restoring faith in the resilience of India’s financial system.
Harshad Mehta scam
The Harshad Mehta scam of the early 1990s is one of the most infamous financial frauds in India’s history. Harshad Mehta, a stockbroker, exploited regulatory loopholes and manipulated the banking system to orchestrate a massive securities fraud. Mehta engaged in a practice known as “stock market manipulation,” where he used large-scale borrowing and unauthorized transactions to inflate the prices of certain stocks. The scam came to light in 1992, leading to a significant erosion of investor confidence and a crisis in India’s financial markets. The aftermath of the scam saw regulatory reforms aimed at strengthening oversight and improving transparency in the financial sector. While the Harshad Mehta scam exposed weaknesses in India’s banking and regulatory systems, it also catalyzed efforts to modernize and enhance the resilience of the country’s financial infrastructure, ultimately contributing to a more robust and accountable financial ecosystem.