The Big Bull misused the banking system to generate fake recepits, through which he raised funds from other banks to trade in stock markets. Shares he bought caught market fancy, skyrocketing, defying fundamentals. When the scam came to light, the market crashed sharply. The BSE Sensex plunged almost 50 per cent from a high of 4,500 to about 2,500 points. Investors lost almost ₹4,000 crore, which, in 1992, was a huge sum.
2000: Ketan Parekh & K-10 stocks
The Ketan Parekh scam capitalised on the dotcom boom of 1999-2000 by betting heavily on IT and telecom companies such as Pentamedia Graphics, HFCL, GTL, Silverline Technologies, Ranbaxy, Zee Telefilms, Global Trust Bank, DSQ Software, Aftek Infosys and SSI — collectively known as K-10 stocks. He took advantage of the low liquidity in these stocks, and in collusion with some promoters, did circular trading. He used funds raised through Ahmedabad-based Madhavpura Mercantile Cooperative Bank and Global Trust Bank for his operation. The scam cost investors over ₹2,000 crore.
2002: The UTI scam
Unit Trust of India was set up in 1964 under Unit Trust of India Act, 1963. UTI, through its flag ship scheme US-64, had made heavy investments in stocks from Ketan Parekh’s K-10 portfolio, such as Himachal Futuristic, Global Tele and DSQ. US-64 lost half of its ₹30,000-crore portfolio value within a year. Around ₹3,400 crore was sunk in just six out of a portfolio of 44 scrips. UTI was forced to suspend the sale and repurchase of US-64 for six months from July 2002, as it could not meet the redemption pressure. The then Union Government had to intervene and brought bailout packages to save investors' wealth.
2005: The IPO scam
This was one of the innovative scams that happened between 2003 and 2005. Most IPOs, including Maruti Udyog, IDFC, YES Bank, NTPC, TCS and Biocon, that hit the market during the bull run between 2003 and 2005 had delivered handsome returns. Roopalben Panchal, along with her associates, operated thousands of banks and demat accounts and cornered shares meant for retail investors in several of these IPOs. Due to a large number of fictitious applications, the retail portion of the public issues was heavily subscribed, resulting in genuine investors losing out.
2008: The Satyam Computer Services scandal
This was a corporate scam that impacted stock investors. Ramalinga Raju, along with directors of Satyam Computer Services, inflated the company's accounts and balance sheets in connivance with auditors and diverted large sums from the company to the property market. Much of this was invested in a property venture called Maytas. The scam came out in 2008, when the Hyderabad property market collapsed, leaving a trail back to Satyam. Total irregularities in Satyam were estimated to be around ₹7,855 crore.
2012-2014: The NSE co-location
This is the scam, haunting the Indian stock markets even now. There are various threads to this scam. One, some brokers colluded with exchange officials to log in first to the co-location server between 2012 and 2014. This preferential access allowed the algo trades of these members to be ahead of others in the order execution. Two, there are allegations that confidential data was shared with certain entities to benefit their business ventures. Three, there are reports that dark fibre was laid between the colo servers of the BSE and NSE without following due processes, to benefit some brokers. The case is currently under investigation. Chitra Ramkrishna, the then NSE Managing Director, was arrested along with other top former honchos of the NSE.
2020: The FT Mutual Fund scam
FT Mutual had announced the winding up of six of its debt mutual fund schemes in India with total assets between ₹25,000 and ₹30,000 crore affecting more than three lakh investors. Due to Covid-led lockdown in March 2020, debt markets turned extremely volatile and illiquid. Consequently, in August 2021, the Supreme Court appointed a liquidator — SBI Funds Management Pvt Ltd — to distribute a portion of ₹2,918.50 crore received from the sale of assets and coupons to its unit-holders across all six schemes.