Scams and Fraud in Stock Market

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1.| What is stock market?| 1|
2.| What is fraud?| 3|
3.| Definition of fraud | 4|
4.| Fraud law & legal definition| 5|
5.| Definition of scam| 7|
6.| When stock fraud occurs| 8|
7.| Financial statement fraud| 10|
8. | Features of security scam| 12|
9.| How to spot stock scams| 13|
10.| Avoiding stock market fraud & scams| 14| 11.| Indicators for scams| 15|
12. | Top 10 stock market scams| 16|
13.| Top 10 scamster of India| 20|
14.| Conclusion| 33|

What is stock market?

A stock market or equity market is a public market (a loose network of economic transactions, not a physical facility or discrete entity) for the trading privately of company stock and derivatives at an agreed price; these are securities listed on a stock exchange as well as those only traded .

The size of the world stock market was estimated at about $36.6 trillion US at the beginning of October 2008 The total world derivatives market has been estimated at about $791 trillion face or nominal value, 11 times the size of the entire world economy. The value of the derivatives market, because it is stated in terms of notional values, cannot be directly compared to a stock or a fixed income security, which traditionally refers to an actual value. Moreover, the vast majority of derivatives 'cancel' each other out (i.e., a derivative 'bet' on an event occurring is offset by a comparable derivative 'bet' on the event not occurring). Many such relatively illiquid securities are valued as marked to model, rather than an actual market price.

The stocks are listed and traded on stock exchanges which are entities of a corporation or mutual organization specialized in the business of bringing buyers and sellers of the organizations to a listing of stocks and securities together. The largest stock market in the United States, by market cap, is the New York Stock Exchange, NYSE. In Canada, the largest stock market is the Toronto Stock Exchange. Major European examples of stock exchanges include the London stock Exchange, Paris Bourse, and the Deutsche Börse. Asian examples include the Tokyo Stock Exchange, the Hong Kong Stock Exchange, the Shanghai Stock Exchange, and the Bombay Stock Exchange. In Latin America, there are such exchanges as the BM&F Bovespa and the BMV.


In the broadest sense, a fraud is an intentional deception made for personal gain or to damage another individual; the related adjective is fraudulent. The specific legal definition varies by legal jurisdiction. Fraud is a crime, and also a civil law violation. Defrauding people or entities of money or valuables is a common purpose of fraud, but there have also been fraudulent "discoveries", e.g. in science, to gain prestige rather than immediate monetary gain. A hoax also involves deception, but without the intention of gain, or of damaging or depriving the victim; the intention is often humorous.


Act or course of deception, an intentional concealment, omission, or perversion of truth, to (1) gain unlawful or unfair advantage, (2) induce another to part with some valuable item or surrender a legal right, or (3) inflict injury in some manner.

Willful fraud is a criminal offense which calls for severe penalties, and its prosecution and punishment (like that of a murder) is not bound by the statute of limitations. However incompetence or negligence in managing a business or even a reckless waste of firm's assets (by...
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