What is an IPO scam and how it is done?

Modus Operandi of an IPO SCAM


Today, CDSL IPO allotment will be done. I have also applied for listing gains.

Wish me Best of luck!! , Congratulations to all those who got allocated today.

Hopes are dim of getting an allotment because the issue was heavily oversubscribed. Reason being it looks to investors as a legitimate IPO. CDSL IPO is from exchange itself. Central Depository Services (India) Limited (CDSL), a subsidiary of BSE Limited operates as a securities depository in India.

Good IPO’s are not easy to get allotted because of too much demand. D-Mart IPO was another one, which gave heavy returns on the listing.

Study well before applying

However, not every IPO we subscribe is a success and sometimes fail badly on a listing day and thereafter. I remember in 2011. I bought IPO of Taksheel Solutions. Incorporated in 1999, Taksheel Solution Ltd is IT Solution Company engaged in the business of providing products and services to the financial services industry, Information Technology & Telecom.

I purchased on 150 rupees and ended up selling at 11 rupees. A big loss and an eye opener for me. The point of telling me all this is that no matter how good a company looks it may fall on listing because company’s financial numbers are being cooked. A layman or average investor cannot make out the difference between cooked and real numbers because the merchant bankers are included in the IPO scam.

So, After the loss I started investing on Google and found out, There’s an interesting investigation program aired on “Exposed” on BloomberUTV on 16th November 2011 at 6.30 pm.

The show exposes every link in the IPO chain that is a nexus between Merchant Bankers and operators and the IPO scam where these operators help dubious companies go public and raise money from the public.

The program exposes the modus operandi of the IPO scam where the listing happens at a huge premium and then crashes, leaving the public investors high and dry.

Please see below videos, Program is old but you will get to know how the game is fixed. As AK says ” Sab Miley hue hein ji” .  😀

Part 1

Part 2

Funny IPO SCAM video of the Great comedian Mr. Jaspal Bhatti

Do share your thoughts if you happen to see the program in the comments section.

There are many aspects which a new trader is unaware of, Do read these posts which are for the new traders.

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