Stockbroker Harshad Mehta Was the 'Big Bull of Dalal Street' Before His Scandal
Harshad Mehta’s net worth came from his stockbroking talent. However, he also was the “kingpin” of a securities scam that rocked the Bombay Stock Exchange.
March 8 2021, Published 1:44 p.m. ET
Late Indian stockbroker Harshad Mehta lived a lavish lifestyle, racked up a reported $7 billion net worth, and earned a reputation as the “Big Bull of Dalal Street” before a 1991–1992 BSE scandal led to his arrest.
After the scandal, the Mehta family took a big hit. In 2016, The Economic Times reported that the family had assets worth Rs 1,723.84 crore or about $235.6 million and total liabilities of about Rs 16,044 crore or $2.2 billion.
Harshad Mehta and the BSE scandal
According to The Economic Times, Mehta was the kingpin of a 1991–1992 securities scam in which Rs 3,500 crore of bank funds were diverted to stockbrokers who then funneled the funds into the stock market across a range of sectors. This helped the S&P Bombay Stock Exchange Sensitive Index (SENSEX) rise more than 4,500 points.
The newspaper also reported that some financial analysts don't think that Mehta was guilty of fraud and that he merely exploited loopholes in the system.
India has since undergone stock market reforms to shore up some of those loopholes, including shortening the settlement cycle from 14 days to two days and requiring a minimum balance for customers buying stocks.
How Harshad Mehta made his millions
The Times reported that Mehta collected fake bank receipts to get other banks to pay him money under the belief that they were lending against securities. That money was diverted to stocks that were then sold at profit after the stock market surged.
Mehta was arrested in 1992 and charged with more than 70 criminal cases related to bribery, cheating, forgery, and other alleged crimes. He was also charged with more than 600 civil action suits. He died in 2001 at age 48 with 27 cases still pending.
In addition to the BSE scandal, Mehta also claimed he paid Rs 1 crore to Prime Minister P.V. Narasimha Rao as a political donation for getting him “off the hook,” The Hindu Business Line reported following Mehta’s death.
How Harshad Mehta spent his money
According to The Hindu Business Line, Mehta spent some of his fortune on a 15,000-square-foot house with a private swimming pool, a golf patch, and a fleet of luxury cars. In 2009, eight homes that Mehta owned were sold at auction for the price of Rs 32.6 crore or about $4.4 million, according to The Economic Times.
Harshad Mehta was married
Harshad Mehta was married to Jyoti Mehta. Recently, she made headlines after winning a court case against a broker who owed Rs 6 crore, or about $820,000, to her late husband. In that February 2019 verdict, a special court ordered broker Kishore Janani and Federal Bank to pay the claim with 18 percent interest, according to India Today.
The family got more good news in February 2019, when an income tax tribunal dismissed most of the tax demand on the family. The tribunal deleted more than Rs 2,000 crore of additions for the 1992–1993 assessment year, according to The Economic Times.