TYPES of FRAUD by PROMOTERS

1:Inflating Sales and adding inflated sales As receivables
EXAMPLE :VETO SWITCH

2:Buying own company stock continously from open market which attracts public
Then selling high because public only know after 3 months.
EXAMPLE :Fiberweb, Shiva global

3:Creating many subsidiary abroad and giving advances and loans which is not audited by statutory auditor.
EXAMPLE :SHILPI CABLE

4:Inviting IPO with lots of advertising which comes always at high premium Then after diverting funds other than mentioned IPO activities.
EXAMPLE :MANPASAND beverage

5:Issuing bonus shares inspite of dividend
Even if there is debt burden on balancesheet, and equity Diluted.

6:Paying dividend out of borrowed money

7:Paying auditor for other services more than their audit fee.

8:Creating continously fixed asset using right issue or borrowed money even if top line not improving.

EXAMPLE :Kesar petro

9:Having related party transaction more than 20% of total revenue.

Author: Atul Singh Stock Market Analyst

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