Headline: Tragic toll of stocks turmoil; A stock market slump in India following allegations of price manipulation has led to a number of suicides. Mark Tully in Delhi investigates.

Source: BBC News, 21 June 2001

URL: http://news.bbc.co.uk/hi/english/business/newsid_1400000/1400804.stm

At least 10 people have committed suicide as a result of the slump in Indian share prices which followed this year's budget.

Now SEBI - the Securities and Exchange Board of India - the body which regulates stock exchanges, has published the first part of its report into the price fixing which led to the slump. But it's still far from clear that SEBI has the know-how or the will to ensure that there is no repeat of the scam.

Investors, international and Indian, applauded this year's budget. It was described as a dream come true. Stockbrokers naturally believed a boom lay ahead. But it didn't.

'Dirt in the dal'

Rumours spread that prices of certain shares were already artificially inflated, that there was "dirt in the dal", or something rotten in the state of the stock exchange.

Investors panicked, prices slumped, and stockbrokers found they couldn't meet their commitments under India's complicated system of delayed payments.

A Bombay financier, facing ruin, hanged himself from a fan. An employee of a Calcutta firm of stockbrokers, believed to have been dealing on his private account, drowned himself in the river Hooghly and his wife jumped from the ninth floor of a high-rise building.

In Delhi, a bank employee and his wife killed themselves in a hotel room. It's believed he might have speculating with money which was not his own.

Now SEBI has come out with a preliminary report on the slump.

Manipulation uncovered

The Board has uncovered manipulation of the market, collusion between companies and brokers, unsecured bank loans to boost share prices, and creative accounting to postpone payments. The report has named some of those who were pumping money into certain stocks to artificially inflate their prices.

But The Hindu, one of India's most sober newspapers, while congratulating SEBI on completing this stage of its report in just over a month has asked "why was the board not able to detect market aberrations much earlier and before any crisis?"

One reason is that SEBI like so many Indian institutions is long on bureaucrats and short on experts who really understand the market. But then SEBI isn't given the funds to pay the sort of salaries the experts could earn elsewhere. One foreign stockbroker also said to me, "SEBI always tends to take its eye off the ball when prices are rising."

New controls

But even if the board's eye had been on the ball it is far from certain that they would have acted in time. SEBI has a much better record of introducing controls than implementing them. That's why the new regulations that SEBI is now introducing for settlements and the new limits on borrowing to finance share purchases might not be as effective in practice as they appear on paper.

Compliance with the new regulations would certainly be better if brokers were afraid of being punished if discovered manipulating the market. Two leading brokers have been arrested but if the fate of the legendary Harshad Mehta - who single-handedly manufactured a bull market nine years ago - is anything to go by they have little to fear. He is out and about, and, brokers say, still active in the market.

To be fair it has to be said that much has been done to improve the functioning of stock markets since that scandal. What's needed to restore confidence after this one is a more professional and active SEBI and a judicial system which does not, through delay, deny justice to investors who have been cheated.

[Andre note: Doesn't this sound like the "brokers jumping out of windows" that supposedly happened during the U.S. market crash in 1929? I say "supposedly" because I recall reading a counter-claim that the suicide statistics didn't rise at the time; on the other hand, there *were* at least a few 1929 suicides clearly related to the Crash of '29, including one almost witnessed by Winston Churchill, who was in New York City at the time.]

-- Andre Weltman (aweltman@state.pa.us), June 22, 2001

Answers

I was just a little kid at the time, but well remember the stories, many years later, of the jumping out of hi-rise Wall Street buildings as a result of the '29 crash. Eerie!

-- JackW (jpayne@webtv.net), June 22, 2001.

Most of those suicide reports surrounding the '29 Market Crash, are urban myths. According to Edward Robb Ellis's recent book, "A Nation in Torment" which documents the Great Depression, "The stock market crash did not launch a huge suicide wave. However, the national suicide rate began climbing in the later part of 1929 and continued to rise until the Depression hit bottom in 1932." Pg 97.

Aparently there was only one "jumper" - "the president of a cigar company crawled out onto the ledge of a Manhatten hotel, was grabbed by a waiter, struggled free and fell to his death." (Ibid, pg 96). However, entertainers of the era got lots of laughs with jokes about the topic. That helped create the impression that supported the urban myth. One wonders how much Leno and Letterman will influence today's generation.

-- Rich Marsh (marshr@airmail.net), June 23, 2001.

Headline: Indian woman kills three daughters, herself

Source: Agence France-Presse via Yahoo, 25 June 2001

http://english.hk.dailynews.yahoo.com/headlines/asia/afp/article.html? s=hke/headlines/010624/asia/afp/Indian_women_kills_three_daughters__he rself.html

NEW DELHI, June 24 (AFP) - A housewife in the Indian capital fed lethal doses of pesticide to her four daughters and then killed herself because of growing debt, a police spokesman said Sunday.

Saroj Devi and three of her daughters, aged between 10 and 16 years, died while the fourth was rushed to hospital in critical stage late Saturday night, the spokesman said.

The father of the girls, a junior staffer at a New Delhi bank, was not home when Devi committed suicide after killing the children.

Police said poverty appeared to be the motive.

-- Andre Weltman (aweltman@state.pa.us), June 25, 2001.