{That a} mere stockbroker might be dubbed Black Cobra then tells the story of how harmful Manu Manek Mundra, the person provided that notorious title, will need to have been.
Born right into a middle-class household in Calcutta within the Forties, Manek began his buying and selling profession whereas nonetheless in faculty, finally graduating as a full-blown dealer. His modus operandi was the identical as that of numerous others who flourished by the Seventies: manipulate the markets within the absence of any efficient regulation.
Pre-Sebi period
This was the period earlier than the Securities and Alternate Board of India (Sebi) was arrange in April 1988. Its predecessor, the Controller of Capital Points, the designated regulatory authority for the Indian securities market, noticed itself primarily as answerable for overseeing the issuance of capital by corporations and was typically disinterested in what they did after that.
Manek began his shenanigans on the Calcutta Inventory Alternate, which within the Seventies was rife with such manipulators. He made his preliminary cash by cornering shares of corporations with low buying and selling volumes and driving up their costs. Ultimately, he would dump them on gullible traders affected by FOMO (worry of lacking out).
Quickly, thereafter, he moved to Bombay, the place he set himself up on the centre of a bear cartel that struck terror within the hearts of firm promoters, although it additionally befriended many. Manek had an outsized affect on company choices, together with the important dividend and bonus bulletins.
By now, he was an acknowledged short-seller. Given his rising wealth, he would additionally lend cash to different merchants at exorbitant charges of curiosity.
With a pure reward for sensing which corporations had been heading into hassle and the power to make sense of numbers, he picked on susceptible corporations, driving down their shares. He stored petty officers on the inventory trade joyful in order that each time he wanted buying and selling to cease for some time, they might name a flash strike.
The conflict with Ambani
In 1982, the mighty marauder took an enormous hit when he crossed swords with the legendary Dhirubhai Ambani. 5 years after the profitable Reliance Industries Ltd (RIL) public provide had made it the darling of the markets, Manek received wind of some monetary misery (it’s fairly potential that he unfold that hearsay).
Now part of a cartel that will hunt in packs, he began promoting RIL inventory with the intention of driving its value down. Nonetheless, even at that early stage of his enterprise, Ambani was too sensible and well-networked to permit the short-seller to get away with it. Utilizing his connections, he purchased off all the things the bear cartel was promoting, thus preserving the share value regular.
Ultimately, within the face of his decided defence, RIL shares rose, and Manek, having run out of choices and needing to supply the shares he had been promoting, was compelled to purchase them from the market at a better value than he had bargained for. The intervening deadlock led to BSE being closed for 2 days whereas Manek settled with Ambani.
However he was a survivor, and the defeat was a short lived setback.
Manek vs Mehta
Quickly, he was again, this time taking over Harshad Mehta, one other notorious scamster. In 1991, the massive bull clashed with the reigning bear, and the end result was a bloody battle. Manek stored focused shares of corporations that Mehta was accumulating. What he hadn’t bargained for was Mehta’s unrestrained means to boost funds from banks with out offering satisfactory safety. This allowed him to maintain shopping for shares that Manek was promoting. Within the face of Mehta’s shopping for frenzy, the bear cartel needed to cede floor.
As soon as once more, Manek needed to style defeat, although he did strike again after Mehta’s pretend financial institution receipt rip-off was outed. Belying the legendary honour among the many thieves, he was stated to have orchestrated the raids on Mehta. A minimum of, that’s what the latter’s spouse, Jyoti, claimed in a letter on their web site: “Manu Manek additionally turned an informer and engineered a raid on Harshad by the I-T division on 28.02.1992.”
The episode turned out to be the final hiss of the black cobra. With Sebi gaining enamel and a brand new era of traders led by Rakesh Jhunjhunwala discovering worth investing, the outdated age of manipulative investing took a brief break (earlier than the likes of Ketan Parekh revived the idea in 2000).
As stealthily as Manek had performed his enterprise, he slithered away into the darkness, not often to be seen once more. His demise was only a aspect notice within the historical past of scams within the Indian markets. That even the date of his passing away is shrouded in thriller is a commentary on his ignominious finish.
