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NSEL: A Case of Fraud in Indian Financial Market*

CASELET, ACCOUNTING, FINANCE AND CONTROL
ET Cases - GSMC, 9 Pages

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NSEL: A Case of Fraud in Indian Financial Market

 

Indian capital markets have come a long way since financial reforms of early nineties. The much-needed reforms of 1990s came as a big boost to the economy and in turn furthered investor’s confidence. Establishment of Securities and Exchange Board of India (SEBI) with full statutory powers was another revolution in financial reforms. SEBI helped in removing direct government control, brought transparency, and ensured free access to capital markets to the investors. It has been governing the behaviour of major market participants such as stock exchanges, brokers, merchant bankers, mutual funds quite efficiently. It was also regulating activities such as takeovers and insider trading in an attempt to enhance investor protection. Opening of the capital markets to Foreign Institutional Investors (FIIs) and allowing Indian companies to raise capital abroad by issuing Global Depository Receipts (GDRs) was another step in the right direction. Reforms followed by setting up of National Stock Exchange (NSE) and National Securities Depository Ltd............

Teaching Note Preview

NSEL: A Case of Fraud in Indian Financial Market

 

Synopsis

The caselet “NSEL: A Case of Fraud in Indian Financial Market” describes the financial fraud that erupted in commodity spot market in the year 2013. Regulatory authorities acted as a mute spectator and failed to take action in time. They could not protect the interest of the investors. The case focuses on how the new financial instrument can act as a weapon of mass destruction in absence of proper regulation.

Pedagogical Objectives

  • • To understand the role of financial regulators in the new arena of financial engineering
  • • To address the risk of new complex financial instruments and markets
  • • To understand how financial intermediaries manipulate financial markets

 

Case Setting and Positing

The case can be used for second year MBA program for the elective courses like Financial Risk Management and Financial Institutions & Markets to elaborate the following themes

  • • Risk of investing in new financial instruments
  • • Risk caused by financial derivatives
  • • Regulatory role in the handling of financial crisis

 

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$3.37
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Product code: FIN-2-0027, FIN-2-0027A

Abstract

Indian financial markets have grown many folds after much sought after financial reforms in nineties. This growth has brought prosperity to the Indian economy. However, it has also exposed the economy to increased financial risks with the outbreak of various financial frauds. This caselet is aimed to provide a detailed view of a financial fraud that erupted in the commodity spot market during 2013. National Spot Exchange Limited (NSEL) scam which broke out in July 2013 was one of the largest in India's financial market history. The scam was a result of regulatory failure and lack of corporate governance. The caselet underlines the role of various stakeholders of financial markets in the fraud. It is intended to introduce the riskiness of new financial instruments and greed of investors in the discussion.



Pedagogical objectives

  • To understand the role of financial regulators in the new arena of financial engineering
  • To address the risk of new complex financial instruments and markets
  • To understand how financial intermediaries manipulate financial markets

Case Positioning and Setting
The caselet can be used for second year MBA or Executive MBA programs for the elective courses like Financial Risk Management and Financial Institutions & Markets to elaborate the following concepts.

  • Risk of investing in new financial instruments
  • Risk caused by financial derivatives
  • Regulatory role in the handling of financial crises


* GSMC 2016, IIM Raipur

This Case Pack Includes:
- Abstract
- Caselet
- Teaching Note (**ONLY for Academicians)
$3.37
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