Beware Of The Scams And Sharks Of Emerging Stock Market

The Indian, Chinese and South East Asian countries of Singapore, Thailand, Malaysia, Indonesia and Philippines emerging stock markets are getting popularity in the recent decades. Unlike their counter parts in the Western and European countries where Stock Exchanges were doing business under close supervision by the Government and other watch-god agencies to prevent any malpractices, the emerging Stock Markets of the Asian countries, particularly India have come across shocking episodes of scams by tricksters starting from 1992. London Stock Exchange which is the age old organization is emulated by other countries including the U.S.A. as a role-model for financial activities in the capital market.

It is not that there are no cone artists or tricksters in these countries but the fact is they are only exceptions and not rules. There is no news of devastating scams reported in these countries as that of the Indian continent where a single fraudulent individual; Harshad Mehta; tricked millions of unwary individual investors by siphoning off lot of money from the public utility institutions like banks and manipulated the share prices to an unheard of upsurge and their fall within a short time.

The effect of this historical scam on the stock market was so huge that it caused tremors in the Indian economy which took many more years to recover from. Followed by this big catch, there were also other scams carried outin the Indian Stock markets in the last 10 years: the IPO bubble of primary market in mobilization of capital from the public on fraudulently inflated share prices on pseudo business organizations and then vanishing into thin air took place during the years 1993 to 1996; preferential allotment of shares in the secondary market to vested interests causing a loss of Rs.5000 crores to the stock market; in the mid 90s a cardboard company deceiving the shareholders to the tune of Rs.1000 crores by a combination of mutual fund, a bank and collection of fixed deposits; luring the investors partly by IPO and partly by mutual fund to mobilize more than Rs.8000 crores and then disappearing by a plantation empire; failure of the Government sponsored Unit Trust of India causing a loss to the public money amounting to Rs.4800 crores - are some of the many to quote.

All the above scams and frauds on the emerging stock markets were possible due to supervisory lethargy and callousness of the officials, as also the greed of those with power in high places. But the present day emerging Stock market dealings of India have come very far away from these duping gangsters, thanks to the timely action taken by the Government in tightening up the rules and regulations for playing in the Stock market. The Securities and Exchange Control Board of India (SEBI) is wielding a closest possible supervision with stringent stipulations on the day to day dealings of Bombay Stock Exchange, the commercial hub of India and other Stock Exchanges in State capitals. Further the advent of internet marketing has helped to a great extent in controlling, supervising and recording the dealing minutely every day. In spite of Bullish and Bearish fluctuations happening in the stock markets on movements of share prices, the investors have to be alert and keep a watch over their investment techniques and avenues for their own safety.