Harshad Mehta

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Harshad Shantilal Mehta (Hindi: ) was an Indian stockbroker. He is alleged to have engineered the rise in the BSE stock exchange in 1992. Exploiting several loopholes in the banking system, Mehta and his associates siphoned off funds from inter-bank transactions and bought shares heavily at a premium across many segments, triggering a rise in the Sensex. When the scheme was exposed, banks started demanding their money back, causing the collapse. He was later charged with 72 criminal offenses, and more than 600 civil action suits were filed against him. Mehta died on December 31,2001 with many litigations still pending against him
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1 Early life 2 Death 3 See also 4 References 5 External links

[edit]Early

life

Harshad Shantilal Mehta was born on 29 July 1953 at Paneli Moti, a village of Rajkot District in a Gujarati Jain family of modest means. His early childhood was spent in Mumbai (Kandivali), where his father was a small-time businessman. Later, the family moved to Raipur in Chattisgarh after doctors advised his father to move to a drier place on account of his health. Mehta studied in Holy Cross Higher Secondary School, Byron Bazar, Raipur.. He traded in the Stock Market on the Bombay Stock Exchange and had an expensive lifestyle. He lived in a 15,000 square feet (1,400 m2) apartment, which had a swimming pool as well as a golf patch. By 1990, Mehta had risen to prominence in the stock market. He was buying shares heavily. The shares which attracted attention were those of Associated Cement Company (ACC). The price of ACC was bid up to Rs 10,000. When asked, Mehta used the replacement cost theory as an explanation. .

Through the second half of 1991 Mehta had earned the sobriquet of the Big Bull, because he was said to have started the bull run. On April 23, 1992, journalist Sucheta Dalal exposed Mehta's illegal methods in a column in The Times of India. Mehta was dipping illegally into the banking system to finance his buying. The authors explain: The crucial mechanism through which the scam was effected was the ready forward (RF) deal. The RF is in essence a secured short-term (typically 15-day) loan from one bank to another. Crudely put, the bank lends against government securities just as a pawnbroker lends against jeweller. The borrowing bank actually sells the securities to the lending bank and buys them back at the end of the period of the loan, typically at a slightly higher price. It was this ready forward deal that Mehta and his accomplices used with great success to channel money from the banking system. A typical ready forward deal involved two banks brought together by a broker in lieu of a commission. The broker handles neither the cash nor the securities, though that wasnt the case in the lead-up to the scam. In this settlement process, deliveries of securities and payments were made through the broker. That is, the seller handed over the securities to the broker, who passed them to the buyer, while the buyer gave the cheque to the broker, who then made the payment to the seller. In this settlement process, the buyer and the seller might not even know whom they had traded with, either being known only to the broker. This the brokers could manage primarily because by now they had become market makers and had started trading on their account. To keep up a semblance of legality, they pretended to be undertaking the transactions on behalf of a bank. Another instrument used was the bank receipt (BR). In a ready forward deal, securities were not moved back and forth in actuality. Instead, the borrower, i.e., the seller of securities, gave the buyer of the securities a BR. As the authors write, a BR confirms the sale of securities. It acts as a receipt for the money received by the selling bank. Hence the name - bank receipt. It promises to deliver the securities to the buyer. It also states that in the mean time, the seller holds the securities in trust of the buyer. Having figured out his scheme, Mehta needed banks which issued fake BRs, or BRs not backed by any government securities. Two small and little known banks - the Bank of Karad (BOK) and the Metropolitan Cooperative Bank (MCB) - came in handy for this purpose. These banks were willing to issue BRs as and when required, for a fee, the authors point out. Once these fake BRs were issued, they were passed on to other banks and the banks in turn gave money to Mehta, assuming that they were lending against government securities when this was not really the case. This money was used to drive up the prices of stocks in the stock market. When time came to return the money, the shares were sold for a profit and the BR was retired. The money due to the bank was returned. The game went on as long as the stock prices kept going up, and no one had a clue about Mehtas modus operandi. Once the scam was exposed, though, a lot of banks were left holding BRs which did not have any value - the banking system had been swindled of a whopping Rs 4,000 crore. When the scam was revealed, the Chairman of the Vijaya Bank committed suicide by jumping from the office roof. He knew that he would be

accused if people came to know about his involvement in issuing cheques to Mehta. M J Pherwani of UTI also died in this scandal. Mehta made a brief comeback as a stock market guru, giving tips on his own website as well as a weekly newspaper column. This time around, he was working with owners of a few companies and recommended only the shares of those companies. This game, too, did not last long.

[edit]Death
STOCK broker Mr Harshad Mehta died at Thane civil hospital following a brief heart ailment. Mr Mehta, who was 47, is survived by his wife and two sons. Mr Mehta was under judicial custody in the Thane prison after a special court remanded him and his two brothers, Mr Ashwin Mehta and Mr Sudhir Mehta, in a fresh case of misappropriation. According to sources, Mr Mehta complained of chest pain late last night and was admitted to the civil hospital where he died around 12.40 a.m. The body was moved to J.J. Hospital for post-mortem. Mr Mehta and his brothers were arrested by the CBI on November 9 for allegedly ``misappropriating (in 1992) more than 27 lakh shares of about 90 companies, including Sensex heavyweights such as ACC and Hindalco, through forged share transfer forms. The total value of the shares was placed at Rs 250 crore. The two brothers have been granted temporary bail for five days following the death of Mr Harshad Mehta. Mr Harshad Mehta started his career as an employee of New India Assurance Company but later quit the job to play the stock market. By 1991, Mr Mehta had become the most recognisable and revered icon of the stock market. Considered a financial genius by many, he was nicknamed the Big Bull who single-handedly decided the course the markets would ply. At the peak of his glory, Mr Mehta lived in a 15,000 sq.ft. house with its private swimming pool and golf patch. His lavish lifestyle and flashy cars were the stuff known only of movie stars. His ``bull run, however, ended in April 1992 when the stock market scam broke out bringing down in its wake several financial entities and causing despair to millions of investors. The man who was singularly credited with the rise of the market was also squarely blamed for the crash. Mr Mehta's fall from grace was as fast as his meteoric rise. Investigations revealed that his ``unending resources were actually siphoned off from the banking system. According to investigators, he had devised an ingenious way of using bank receipts to feed the stock market frenzy. He was arrested and banished from the stock market with investigators holding him responsible for causing a loss of more than Rs 4,000 crore to various entities.

Mr Mehta again raised a furore in 1995 when he made a public announcement that he had paid Rs 1 crore to the then Congress President and Prime Minister, Mr P.V. Narasimha Rao, as donation to the party for getting him ``off the hook. The decade-long tug of war with the law that started in 1992 was continuing when Mr Mehta died. He had altogether 28 cases registered against him. The trial of all except one, are still continuing in various courts in the country. Market watchdog, Securities and Exchange Board of India, had recently banned him for life from stock market-related activities. Mr Mehta perhaps had as many admirers as critics. If he was loathed by some, he was revered by many. But almost all of them admit that he caused a ``change in the Indian stock market, permanently.[1][2]

By the time he died, Mehta had been convicted in only one of the many cases filed against him. The Mehta scandal was portrayed in a recent Hindi movie, Gafla.[3]

n economics and finance, an index is a statistical measure of changes in a representative group of individual data points. These data may be derived from any number of sources, including company performance, prices, productivity, and employment. Economic indices (index, plural) track economic health from different perspectives. Influential global financial indices such as the Global Dow, and the NASDAQ Composite track the performance of selected large and powerful companies in order to evaluate and predict economic trends. The Dow Jones Industrial Average and the S&P 500 primarily [1] track U.S. markets, though some legacy international companies are included. The Consumer Price Index tracks the variation in prices for different consumer goods and services over time in a constant geographical location, and is integral to calculations used to adjust salaries, bond interest rates, and tax thresholds for inflation. The GDP Deflator Index, or real GDP, measures the level of prices of all new, [2] domestically produced, final goods and services in an economy. Market performance indices include the labour market index/job index and proprietary stock market indexinvestment instruments offered by brokerage houses. Some indices display market variations that cannot be captured in other ways. For example, the Economist provides a Big Mac Index that expresses the adjusted cost of a globally ubiquitous Big Mac as a percentage over or under the cost of a Big Mac in the U.S. with a U.S. dollar (estimated: [3] $3.57). Norway prices reflect most relatively expensive Big Mac, at an 84% increase over U.S. prices, or $6.5725 U.S. The least relatively expensive Big Mac price occurs in Hong Kong, at a 52% reduction from U.S. prices, or $1.71 U.S. The Big Mac index is used to predict currency values. From this example, it would be assumed that Hong Kong currency is undervalued, and provides a currency investment opportunity.
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1 Index numbers

1.1 Index number problem

2 Indices 3 See also 4 References 5 Further reading 6 External links

[edit]Index

numbers
a consensus.

Whether to make the |reason= mandatory for the {{cleanup}} template is being discussed. See the request for comment to help reach

This section may require cleanup to meet Wikipedia's quality standards. (Consider using more specific cleanup instructions.) Please helpimprove this section if you can. The talk page may contain suggestions. (January 2011) An index number is an economic data figure reflecting price or quantity compared with a standard or [4][5] base value. The base usually equals 100 and the index number is usually expressed as 100 times the ratio to the base value. For example, if a commodity costs twice as much in 1970 as it did in 1960, its index number would be 200 relative to 1960. Index numbers are used especially to compare business activity, the cost of living, and employment. They enable economists to reduce unwieldy business data into easily understood terms. In economics, index numbers generally are time series summarising movements in a group of related variables. In some cases, however, index numbers may compare geographic areas at a point in time. An example is a country's purchasing power parity. The best-known index number is the consumer price index, which measures changes in retail prices paid by consumers. In addition, a cost-of-living [6] index (COLI) is a price index number that measures relative cost of living over time. In contrast to a COLI based on the true but unknown utility function, a superlative index number is an index number that [6] can be calculated. Thus, superlative index numbers are used to provide a fairly close approximation to [6] the underlying cost-of-living index number in a wide range of circumstances. There is a substantial body of economic analysis concerning the construction of index numbers, desirable properties of index numbers and the relationship between index numbers and economic theory. [edit]Index

number problem

See also: Price Index The "index number problem" refers to the difficulty of constructing a valid index when both price and [citation needed] quantity change over time. For instance, in the construction of price indices forinflation, the nature of goods in the economy changes over time as well as their prices. A price index constructed in

1950 using a standard basket of goods based on 1950 consumption would not well represent the prices faced by consumers in 2000, as goods in some categories are no longer traded in 2000, new categories of goods have been introduced, and the relative spending on different categories of goods will change drastically. Furthermore, the goods in the basket may have changed in quality. There is no theoretically ideal solution to this problem. In practice for retail price indices, the "basket of goods" is updated incrementally every few years to reflect changes. Nevertheless, the fact remains that many economic indices taken over the long term are not really like-for-like comparisons and this is an issue taken into account by researchers in economic history. [edit]Indices The embedded lists in this section may contain items that are not encyclopedic. Please help out by removing such elements and incorporating appropriate items into the main body of the article. (July 2010) Provider: Dow Jones Dow Jones Industrial Average

Provider: Standard & Poor's S&P 500 S&P 400 S&P 600 S&P 1500 S&P/ASX 200 S&P/TSX Composite Index S&P Global 1200 S&P Custom Group of indices S&P Leveraged Loan Index

Provider: Russell Investments Russell 1000 Index Russell 2000 Index Russell 3000 Index Russell Midcap Index Russell Microcap Index Russell Global Index Russell Developed Index Russell Europe Index Russell Asia Pacific Index Russell Emerging Markets Index

Provider: Morgan Stanley Capital International

MSCI World Index MSCI EAFE (Europe, Australasia, and Far East) Index

Provider: Bombay Stock Exchange BSE SENSEX

Provider: Reuters Reuters-CRB Commodities Index

Provider: Markit ABX CDX / iTraxx CMBX

Provider: Historic Automobile Group HAGI Top Index