what are scams in stock market . about in 120 words
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Explanation:
Securities fraud, also known as stock fraud and investment fraud, is a deceptive practice in the stock or commodities markets that induces investors to make purchase or sale decisions on the basis of false information, frequently resulting in losses, in violation of securities laws. Fraudsters post messages online enticing investors to buy a stock quickly, with claims to have inside information that a development will lead to an upswing in the share's price. Once buyers jump in, the perpetrators sell their shares, causing the price to drop dramatically. New investors then lose their money. Stock scams are a common way to separate stock market investors from their money. They often start simply and many times they include promises of potential profit that are too good to turn down.Overview. The scam was the biggest money market scam ever committed in India, amounting to approximately Rs. 5000 crore. The main perpetrator of the scam was stock and money market broker Harshad Mehta
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We now have a penny stock nudge on our buy order window (currently on the web and soon on mobile). The idea is to alert you if you didn’t know what you are investing is in a penny stock, and we will also have an additional warning for stocks which we think are currently being manipulated through SMS tips and social media buzz. Of course, you would be free to proceed, but hopefully, you won’t, and even if you did you will reduce the trading size to as little as possible to reduce your .Again, apart from the loss, there is another issue to consider. The government introduced Long Term Capital Gains (LTCG) tax of 10% a couple of years ago to control money laundering fraud that runs through such penny stocks, a fraud estimated to be the size of tens of thousands of crores. The operator who moves the price of the stock from almost 0 to much higher before selling, would also do it by holding the stock for more than 1 year to benefit from lower long term capital gain (LTCG) tax (10% now, but was only 0% earlier) on the profits. So the operator isn’t just potentially ruining many gullible investor’s financial health, but is also potentially converting someone’s black money into tax-free white money in the process. With LTCG now at 10%, this now becomes the cost for an operator to convert black into white. Govt is hoping that it could act as a deterrent. Income tax department keeps a close watch on everyone transacting in such suspicious companies. What this means is that, even if you made some money trading such a stock, you could get an Income tax scrutiny notice which potentially can lead to a penalty of more than the profits earned.