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Pied Piper to Prisoner, He was Harshad Mehta

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The stock market has a long history of scams in India, where the year 1992 holds a special place. It was in that year, Harshad Mehta first deftly manipulated the nation's stock market. Even though he passed away more than 20 years ago, we have heard, seen, read, and discussed Harshad a lot, let us again revisit what transpired by looking at it from a new perspective: The Timelines

Who was Harshad Mehta?


In Raipur, India, Harshad was born into a family with modest means. His father's work as a peon provided for basic needs, but financial challenges were ever-present. Despite these limitations, Harshad had a keen mind and graduated with a commerce degree from Ravishankar University. With ambition driving him, he then relocated to Mumbai with only ₹40, determined to make a name for himself.


The bull market of the 1980s was a great time for Mehta. He began his career as a humble subbroker. He developed his talents, learned about finance, and attracted mentors and clients with his charisma. He made smart trades and found ways to make money. He made acquaintances with powerful individuals. His audacious trades and profitable opportunities brought him quick fame. He became the stereotypical Bombay boy living the high life, owning expensive homes and fancy cars. 

What did he do?


Mehta's stock market ability was not the only factor in his success. He took advantage of loopholes in the banking system. He would use fictitious paperwork and questionable collateral to obtain large loans. He manipulated stock prices and inflated the shares, causing their prices to skyrocket. Mehta would then sell these shares at a high price, making a lot of money for himself and his investors, who considered his choice of shares a Midas touch. He appeared untouchable due to rumours that he had political connections. This assisted him in evading any investigation or suspicion.

How the case got tipped off?


Mehta enjoyed showing off his wealth and luxury. He always wanted to be the centre of attention. But behind the glittering facade of Porsches and penthouses lurked a darker truth. Investigative journalist Sucheta Dalal revealed the plot against Harshad Mehta and the collapse of Harshad.

Dalal saw Mehta driving up to the State Bank of India (SBI) headquarters in a brand-new Toyota Lexus. This made her suspicious, and she decided to investigate. At that time, the Lexus was only available on the international market, making it an even more extravagant purchase. 

After months of investigation, she made headlines about Harshad's intricate web of financial fraud, forgery, and deceit on the front page of a newspaper, shocking the country and causing tremors in the financial sector—including the revelation that he had defrauded the State Bank of India out of six billion rupees.

The aftermath


Manipulating stock prices Used fake bank receipts forged cheques and loopholes to artificially inflate stock prices up to 4400

Mehta was taken into custody and held for 107 days. When he was freed in June 1992, a crowd of cheering and yelling investors welcomed him back into the market, hoping to spark an endless bull run.

Harshad Mehta had built an image as the pied piper of the Indian stock market. He asserted, ‘I thought I would be like Pied Pier.’ In a 1992 interview with a major newspaper. ‘I thought I could sell dreams, that asset-creation is not a crime, and that if you wanted to be Harshad Mehta, come to the stock market.’

After the scandal rocked the market, it felt like Harshad and his brother would never go away. Days after his release, Harshad was back in the news. He stayed in the spotlight, making headlines like nobody else. He held press conferences at fancy hotels and hired high-profile lawyers.

Roller-coaster events

Harshad also shocked the country when he said he gave the then-prime minister ₹10 million as a party donation in return for escaping from the scandal. He was the first to confront the minister regarding the alleged fraud. Even though everything was denied and later proved to be false, it still made headlines and became the talk of the community.

But Harshad's drama was not the only thing that kept him in the headlines. Sucheta Dalal emphasized that Harshad unexpectedly received favourable media coverage from 1997 to 1998. A few journalists even wrote positive articles about his return and offered him a platform to express his opinions. 

Significant disruption was also caused by the Harshad Mehta scam to the Indian financial sector, which led the government to enact several measures to control the stock market and prevent future frauds of this kind. The fraud also led to the establishment of oversight bodies like the National Stock Exchange (NSE) and the Securities and Exchange Board of India (SEBI) to offer more accountability and transparency in the Indian stock market.

Failed Comebacks


Harshad Mehta attempted, and almost always failed, to return after 1992. Investors didn't fall for his old tricks anymore. He couldn't manipulate the market like he used to, and his attempts were short-lived. He was put back in jail again.

How he died?


Harshad Mehta passed away in jail on December 31, 2021, at the age of 47 from a heart attack. At the Thane Civil Hospital, he breathed his last. He is survived by his wife, two sons, and two brothers, Ashwin and Sudhir.

The Ignominy

Harshad Mehta's legacy is complex, a mix of genius and greed. He serves as a reminder of the investment's risks and rewards. His narratives serve as a cautionary tale, a reminder that there is a fine line between intelligence and dishonesty.

So, if you go back and watch those web series or movies, you will have a better understanding of the stock market, the financial world, the reasons behind bankers' arguments, and the emotions that drive them.

But the question remains- ‘With just 22 months in prison and fines, was Harsha Mehta's punishment justified?’

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