Tyco International is a diversified manufacturing conglomerate that deals with electronic components, health care, fire safety, security,

and fluid control with headquarters in New Jersey, USA. In 2005, its CEO Dennis Kozlowski and CFO Mark H. Swartz were found guilty of stealing $600 million from the company. These two symbolized the excesses of executive compensation at shareholders expense, where Kozlowski will be remembered for the $2 million birthday bash he gave his wife on a Mediterranean Island at the companys expense. Lance Armstrong is not only a Tour de France champion and the man behind the Live strong Foundation, but he also owns several businesses and investments. He owns the coffee shop Juan Pelota Caf, a bike shop named Mellow Johnny, and has several million dollars investment in the American bicycle component manufacturer SRAM Corporation. However, due to his doping confessions, he might not only lose his title and his sponsorships, but also need to sell his shares back to SRAM. Parmalat, an Italian company, is the leading global producer of Ultra Hot Temperature (UHT) milk and other foods. However, its founder, Calisto Tanzi was accused of questionable accounting practices in 2003 when a 14 billion hole was discovered in the companys accounting records. This resulted in on of the biggest corporate scandals in history as he was selling credit-linked notes to the company and diverting the companys funds elsewhere. 1. The Brooklyn Bridge Scam The Scammer: George C. Parker The Victim: Wealthy New York tourists In the early 1900s, George C. Parker "sold" the Brooklyn Bridge and other famous New York structures as often as twice a week. If youve heard the old line, If you believe that, Ive got a bridge for sale, you know where it comes from. Harshad Mehta Scam: In the early 1990s, the banks in India had to maintain a particular amount of their deposits in government bonds. This ratio was called SLR ( Statutory Liquidity Ratio). Each bank had to submit a detailed sheet of its balance at the end of the day and also show that there was a sufficient amount invested in government bonds. Now, the government decided that the banks need not show their details on each day, they need to do it only on Fridays. Also, there was an extra clause that said that the average %age of bond holdings over the week needs to be above the SLR but the daily %age need not be so. That meant that banks would sell bonds in the earlier part of the week and then buy bonds back at the end of the week. The capital freed in the starting of the week could then be invested. Now, at the end of the week many banks would be desperate to buy bonds back. This is where the broker comes in. The broker knew which bank had more bonds (called plus) and which has less than the required amount (called short). He then acts as the middleman between the two banks. Harshad Mehta was one such broker. He worked as a middle man between many banks for a long time and gained the trust of the banks senior management. Lets say that there are tw o banks A (short) and B (plus). Now what Harshad Mehta did was that he told the banker at A that he was dealing with many banks and hence did not know who would he deal in the end with. So he said that the bank should write the cheque in his name rather than the other bank (which was forbidden by law), so that he could make the payment to whichever bank was required. Since he was a trusted broker, the banks agreed. Then, going back to the example of bank A and B, he took the money from A and went to B and said that he would pay the money on the next day to B but he needed the bonds right now (for A). But he offered a 15 % return for bank B for the one day extension. Bank B readily agreed with this since it was getting such a nice return Now since Harshad Mehta was dealing with many banks at the same time he could then keep some capital with him at all times. For eg. He takes money from A on Monday, ,and tells B that hell pay on Tuesday, then he takes money from C on Tuesday and tells D that hell pay on Wednesday and the money he gets from C is paid to B and as a result he has some working capital with him at all times if this goes on with other banks throughout the week. The banks at that time were not allowed to invest in the equity markets. Harshad Mehta had very cleverly squeezed some capital out of the banking system. This capital he invested in the stock market and managed to stoke a massive boom.

He took the price of ACC from 200 to 9000.Thats an increase of 4400%!!!The market went up like crazy and the bulls were on a mad run. Since he had to book profits in the end, the day he sold was the day when the market crashed. The same day Vijaya Bank chairman committed suicide by jumping from the top of the banks office. The chairman knew that when it would become public that he had written cheques in the name of Mehta, he would be dead meat. One rather unknown fact about this scam is that there was a very important player in this scam who managed to keep a very low profile. That man was Nimesh Shah. He was just as involved as Harshad Mehta but he knew how keep out of the hands of the law. Nimesh Shah still deals in the stock market and is known to be a heavy player. Harshad Mehta is now dead. It is rumored that when he died, he still had 10% of ACC shares with him. Who is Ketan Parekh Ketan Parekh is a former stockbroker based in Mumbai who was convicted in 2008 for being involved in engineering the technology stocks scam in Indias stock market in 1999-2001. A chartered accountant by training, Parekh comes from a family of brokers and is currently serving a period of disqualification from trading in the Indian bourses till 2017. Ketan Parekh has been accorded with sobriquets such as the Pentafour Bull and the One Man Army by the countrys national business newspapers, while the market simply refers to him as KP or associates him with his firm NH Securities. Parekh is known to have no reluctance in meeting the press. He is also known to have razor-sharp forecasts on market developments. What distinguishes Ketan Parekh from the 'Big Bull' late Harshad Mehta The two have been compared by people to have operated their scams using similar means and that their backgrounds were similar as well. But the differences are very conspicuous. At the outset, Mehta came from a lower middle-class and modest background, while KPs family has been engaged as stockbrokers for a significant time. He is also related to many prominent brokers. Secondly, when Mehta was operating, the market was still a closed one and was just beginning to liberalize. It was revealed later that Mehta operated using the money of other people as his last recourse. Further, Mehta is known to have resorted to aggressive publicity campaigns whereas KP operates almost clandestinely. The latter has also been successful at creating stories and selling them aggressively to institutional investors. The Midas touch Parekh attracted the attention of market players and they kept track of every move of Parekh as everything he was laying his hands on was virtually turning into gold. But the Pentafour Bull still kept a low profile, except when he hosted a millennium party that was attended by politicians, business magnates and film stars. And by 1999-2000, as the technology industry began embracing the entire world, Indias stock markets started showing signs of hyperactivity as well and this was when KP struck. Almost everyone, from investment firms which were mostly controlled by promoters of listed companies to foreign corporate bodies and cooperative banks were eager to entrust their money with Parekh, which, he in turn used to inflate stock prices by making his interest obvious. Almost immediately, stocks of firms such as Visual soft witnessed meteoric rises, from Rs 625 to Rs 8,448 per unit, while those of Sonata Software were up from Rs 90 to Rs 2,150. However, this fraudulent scheme did not end with price rigging. The rigged-up stocks needed dumping onto someone in the end and KP used financial institutions such as the UTI for this. When companies seek to raise money from the stock market, they take the help of brokers to back them in raising share prices. KP formed a network of brokers from smaller bourses such as the Allahabad Stock Exchange and the Calcutta Stock Exchange. He also used BENAMI or share purchase in the names of poor people living in Mumbais shanties. KP also had large borrowings from Global Trust Bank and he rigged up its shares in order to profit significantly at the time of its merger with UTI Bank. While the actual amount that came into Parekh's kitty as loan from Global Trust Bank was reportedly Rs 250 crore, its chairman Ramesh Gelli is known to have repeatedly asserted that Parekh had received less than Rs 100 crore in keeping with RBI norms.

Parekh and his associates also secured Rs 1,000-crore as loan from the Madhavpura Mercantile Co-operative Bank despite RBI regulations that the maximum amount a broker could get as a loan was Rs15-crore. Hence, it was clear that KPs mode of operation was to inflate shares of select companies in collusion with their promoters. Lady luck disfavours Parekh! Notably, a day after the presentation of the Union Budget in February 2001, Parekh appeared to have run out of luck. A team of traders, Shankar Sharma, Anand Rathi and Nirmal Bang, known as the bear cartel, placed sell orders on KPs favorite stocks, the so called K-10 stocks, and crushed their inflated prices. Even the borrowings of KP put together could not rescue his scrips. The Global Trust Bank and the Madhavpura Cooperative were driven to bankruptcy as the money they had lent Parekh went into an abyss with his reportedly favourite K-10 stocks. The exposure of the dupe As with the Harshad Mehta scam, Ketan Parekh's fraudulent practices were first exposed by veteran columnist Sucheta Dalal. Sucheta's column read, It was yet another black Friday for the capital market. The BSE sensitive index crashed another 147 points and the Central Bureau of Investigation (CBI) finally ended Ketan Parekhs twoyear dominance of the market by arresting him in connection with the Bank of India (BoI) complaint. Many people in the market are not surprised with Parekhs downfall because his speculative operations were too large, he was keeping dubious company, and he was dealing in too many shady scrips. When the prices of select shares started constantly rising, innocent investors who had bought such shares believing that the market was genuine were about to stare at huge losses. Soon after the scam was exposed, the prices of these stocks came down to the fraction of the values at which they had been bought. When the scam did actually burst, the rigged shares lost their values so heavily that quite a few people lost their savings. Some banks including Bank of India also lost significant amounts of money. Dalal goes on to state that Parekh's scheme was not visible to a layman given the positive deflection that media had made him a hero while some of the biggest national dailies had even quoted him profusely on that years Union Budget. Dalal added that KPs arrest and the uncanny similarity of his operations to the Harshad Mehta securities scam of 1992 vindicated the miserable inadequacy of the countrys regulatory system. The Securities Exchange Board of India (SEBI) and the Reserve Bank of India (RBI) had remained complacent when the stock bubble was created during the latter half of 1999 and through 2000 while it had not bothered to take any action through 2001 when it was ready to burst. SEBIs damage control measures SEBI investigations into Parekh's money laundering affairs revealed that KP had used bank and promoter funds to manipulate the markets. It then proceeded with plugging the many loopholes in the market. The trading cycle was cut short from a week to a day. The carry-forward system in stock trading called BADLA was banned and operators could trade using this method. SEBI formally introduced forward trading in the form of exchange-traded derivatives to ensure a well-regulated futures market. It also did away with broker control over stock exchanges. I n KPs case, the SEBI found prima facie evidence that he had rigged prices in the scrips of Global Trust Bank, Zee Telefilms, HFCL, Lupin Laboratories, Aftek Infosys and Padmini Polymer. Furthermore, the information provided by the RBI to the Joint Parliamentary Committee (JPC) during the investigation revealed that financial institutions such as Industrial Development Bank of India (IDBI Bank) and Industrial Finance Corporation of India (IFCI) had given loans of Rs 1,400 crore to companies known to be close to Parekh. - See more at: http://flame.org.in/knowledgecenter/scam.aspx#sthash.aBi6ikTF.dpuf