Inside India’s 10 Biggest Market Frauds: Scams That Changed the Rules
Published on May 1, 2025 by Renuka Bangale
Top 10 Stock Market Frauds in India
India’s stock markets have witnessed several high-profile frauds that shook investor confidence and triggered major regulatory changes. These scams, driven by greed and manipulation, exposed deep flaws in corporate governance. From rigged stock prices to fake financials, each case tells a cautionary tale. This post highlights the top 10 stock market frauds that left a lasting impact. Explore how these scams unfolded and what lessons they offer today.
Harshad Mehta Scam (1992) – ₹4,000 crore
Modus Operandi: Harshad Mehta exploited loopholes in the banking system by illegally obtaining funds from banks and investing them in the stock market to artificially inflate stock prices (notably ACC). He created a bull run and profited from the difference. Impact: The scam exposed systemic flaws in India's banking and financial systems. It led to the creation of SEBI as a stronger regulator and tighter control of bank dealings with the stock market.
Ketan Parekh Scam (2001) – ₹1,200 crore
Modus Operandi: Parekh manipulated stock prices of select “K-10” stocks using circular trading, pump-and-dump strategies, and financing through NBFCs. He also used bank funds, especially from Madhavpura Mercantile Cooperative Bank, to fund his market operations. Impact: Crushed investor confidence and led to the collapse of several companies. Resulted in further reforms and tighter control over insider trading and circular trading.
Satyam Computers Scam (2009) – ₹7,800 crore
Modus Operandi: Chairman Ramalinga Raju falsified accounts by inflating revenues and profits for years. This included creating fictitious assets, inflating cash reserves, and underreporting liabilities. Impact: Known as "India’s Enron," it shocked corporate India. The scam led to the overhaul of corporate governance norms and stricter regulations under SEBI and MCA.
Saradha Chit Fund Scam (2013) – ₹2,500 crore+
Modus Operandi: Saradha Group, posing as a chit fund, raised money from investors promising high returns and diverted funds to non-existent businesses and political lobbying. Impact: Primarily affected small investors in West Bengal and Assam. Highlighted the need for stronger regulation of non-banking financial companies and Ponzi schemes.
Punjab National Bank-Nirav Modi Scam (2018) – ₹13,000 crore
Modus Operandi: Nirav Modi and Mehul Choksi fraudulently obtained LoUs (Letters of Undertaking) from PNB to secure foreign credit without proper collateral or approvals. Impact: India’s biggest banking fraud, led to global manhunt for Nirav Modi and major reforms in SWIFT transaction controls and audit practices in banks.
DHFL Scam (2019) – ₹34,000 crore
Modus Operandi: Dewan Housing Finance Corporation Ltd siphoned off funds via shell companies and fake loan accounts, using complex money laundering techniques. Impact: One of the largest NBFC-related scams, it led to bankruptcy proceedings and deep scrutiny into housing finance companies.
Spright Agro Scam (2025) – ₹4,675 crore
Modus Operandi: Artificial stock price inflation using circular trading, insider trading, and fund diversion through shell companies. Stock manipulated from ₹5 to ₹55.41 before crashing. Impact: Massive retail investor losses. Raised serious questions about SEBI's vigilance in a tech-driven trading environment. Prompted calls for regulatory reforms.
IndusInd Bank Insider Trading Case (2025)
Modus Operandi: CEO and Deputy CEO traded shares before a major internal financial discrepancy was disclosed (a $230 million derivatives deficit), violating insider trading rules. Impact: Top management resigned. RBI intervened with a new executive committee. Damaged investor trust and bank credibility.
Axis Mutual Fund Front-Running Case (2022–2024)
Modus Operandi: Traders executed personal trades ahead of large mutual fund deals to profit from price movements, using privileged information. Impact: SEBI barred involved officials, and ED seized illegal gains. Mutual fund sector saw tighter surveillance and compliance norms.
Karvy Stock Broking Scam (2019) – ₹2,000 crore
Modus Operandi: Karvy misused client securities worth ₹2,000 crore by pledging them to raise loans for itself without client consent. Impact: SEBI took strict action by banning Karvy from trading. Prompted reforms in the demat and broking system, with stricter controls on broker misuse.