Wednesday, January 7, 2009

Did Raju Really Become A Gentleman or a Multi-Billionaire Overnight?

I am not someone who really believes in conspiracy theories. But what makes a dishonest man, suddenly confess to his sins? Without any court case, without and investigation – how come Raju, suddenly writes a letter and confesses to the world how he cheated Satyam investors of thousands of crores?

What made him suddenly listen to his conscience? Where was his conscience when he wanted to give away thousands of crores of shareholder money to his son’s company? By now, I am sure you must be knowing what has happened with Raju and how the figures in the financial statements were manipulated. Almost every news paper, TV channel and financial website will talk about it. Talks about punishing him and protecting shareholders – these are things anyone with common sense will agree with and support. I wouldn’t discuss those things now, as I don’t think there is any need for me to do so.

However what most people, including the regulators will miss is that is it possible that Raju did all this because he suddenly because a gentlemen or was this another scam to make even more money?

I have a feeling that a snake always bites and never turns into docile sheep. I find it shocking to believe that Raju, suddenly became a gentleman and confessed to his crimes. The truth according to me – or what my inner voice is telling me is that, the letter in which Raju confessed his sins helped him make thousands of crores.

In order to catch a criminal, we need to think like a criminal. We need to ask ourselves, if we were unethical people, what really would we do? Why would we just confess? Is it possible that an 80% fall in stock price was used by Raju, to make thousands of crores?

Is it possible that Raju (or people acting for him through different identities and accounts) bought Put options worth several hundred crores and went short, just before he publicly shared the letter with the world? Most people don’t understand how it is possible to make money when stock prices go down – however those who understand Put options and Shorts, will tell you that the more the stock price goes down the more money can be made.

So for instance if the stock price goes down by 1%, and you are holding a Put option – you make 10%. Isn’t it possible that Raju, told people or through fictitious accounts bought Put options worth hundreds of crores and exited all of them with profits running into several thousand percent when the Styam stock fell? A fall in the share price of Satyam of 80%, would mean he must have made thousands of crores. Did Raju use unethical ways to cash the crash in his stock price? We all know how unethical businessmen burn their godowns filled with worthless junk, only to claim insurance. Don't we? Why can't the same thing happen in the stock market?

His shareholding in Satyam, was anyway very minor and he probably thought he has already lost his reputation, he might as well do some manipulations and make thousands of crores.

To catch a criminal you need to think like one. Why on earth will he confess to such things without any pressure, court case or legal proceedings? Even if there were legal proceedings against him, he could have simply denied this fact and let the court case go on for several decades.

There is surely more to this than we can see on the surface and regulators should investigate this. Today’s stock price fall of 80% probably made Raju and his family even richer.

The regulators, media nor investment experts have still not spoken or discussed this issue, as I feel they still have not thought on those lines. Unfortunately or fortunately, they come from a more professional, bureaucratic and formal background and are unable to think on the same lines as people who are playing in the market. I don’t mean to belittle them, I am just saying is that to fight financial crime we need people who are able to think just like the criminals. I hope what I have just shared with you gets investigated and we will know what the real truth is.

Investor rights need to be protected and the criminals need to be punished. It is very sad when innocent people lose there hard earned money because of unethical accountants, auditors and promoters.

I think this proves to all those non-believers, that the best way to invest is not simply by looking at the balance sheet, but by understanding the business. The Happionaire Way has been saying this since the very beginning – but still a few conventional students of finance did not agree with it. Now is a good time for the old rules to change. More important than just numbers, is the real business.

If you spoke to anybody in the IT industry, even sometime ago, they would have told you how Satyam doesn’t have the most ethical of practices. I had done that and that is why never fancied it.

Coming back to my question - Did Raju Really Become A Gentleman or a Multi-Billionaire Overnight? Did the 80% fall in stock price today help him make thousands of crores? I hope we get the real answer soon. What do you feel? I would like to hear from you here.

I hope hard working employees and investors, are not made to suffer because of one Raju. May God bless people with wisdom so they know that the most important thing in our lives is not to cheat people only for the sake of money. This life is a gift where we are all meant to do greater things.

Yogesh Chabria

Also read: Can You Really Cash The Crash?


Anonymous said...

I could have never imagined such a know now that you mention is quite possible he did this very thing....why else would a fraud write a letter and ...not inform anybody else...?

This is a brilliant explanation Yogesh. You should probably..head..the SEBI.......

Anonymous said...

You know even though what you say sounds to strange at first Yogesh, I think it is a very valid explanation.

We can't trust a snake like Raju and he must have surely used this chance to further make money and cheat people.

I would vote for you to head the SEBI for sure as jayant says and head i nvestor education in India too.

Anonymous said...

This is totally amazing to discover. This rumor/theory can very well be true according to me. SEBI should look into it.

Anonymous said...

I am not the same scum - Raju of Satyam - but a common and honest investor and Happionaire.

I just wnted to add that please friends share this post with all other Indians so they can know the truth. This is quite a great possibilty for the reason he wrote the letter- to make the stock fall and make even more money.

What a scum and where has his consicence disappeared?

We should boycott people like PWC who just wna tmoney and to cheat us Indians.

Jai Hind and we need more Indians like Yogesh.

Anonymous said...

Their auditors are to blame too. never trust PWC from now on friends!

Just blacklist them.

Unknown said...

This is very relevant analysis. Few days back Raju had reconfirmed that they have Rs.5000 crs. of cash reserves, after which the stock recovered from 110 levels to 180 levels. Later on the same person confesses for fraud. We should think like crime people and analyse all other angles to make things more clear, so that investors don;t suffer more shocks..

Anonymous said...

This is the most valid explanation any one can comprehend and it's logical. A cheat like Raju can definetely do this when he could fool the world for so many years. You have rightly said, think like a criminal if you want to catch a criminal. I have seen this phrase in one of the latest film. Yogesh, why don't you join the investigation team. I will recommend your name from the investor's club.

L R Iyer

Gopinath Mavinkurve said...

Hi Yogesh! Wow, incredible investment opportunity! Never could think of such a possibility for the fraudster. Raju ban gaya conman, not gentleman. Certainly needs investigation...lots of things to investigate actually, even his diet would be chocolate fudge for dessert until lately that he would have to eat crow!
Read about it in my post here.

Anonymous said...

Yogesh Sir,

This is the reason I always say we need to have people from the market with practical "Street" type experience in the regulatory body. What a person like you - who has learnt from the practical streets of investing will know, even person from Harvard, ISB and IIM together might not be able to think.

As others said here, I think what you are saying can very well be true. He must have taken a personal loan and done this.

Even though what happened is very sad, I am glad I am getting to learn so many things here that I would never learned.

Anonymous said...

The sad part is that the common employees of Satyam will suffer.

This shows that the scam is even bigger than most others have yet realized. Truth is always stranger than fiction.

Best explanation to what happened ever.

Anonymous said...

Hi Yogesh
What is the point of making so much money in shorts and puts if you are going to spend 10 years in jail? Does any family wants money so desperately?

I dont think Raju would have made money by shorting Satyam but whatever he did has brought down the image of corporate India in a big way.What an irony that the company was named "Satyam"!!!

Anonymous said...

Anonymous, He was anyway going to be caught that is why maybe he said better to confess and pretend to become a gentleman. Same time maybe now he will on;y have to pay a fine and less jail term.

Even in jail, you know he will live like a rich man. I feel it is highly likely he did what Yogesh is saying very well.

Anonymous said...

From "Satyam" name should be changed to "Scamam"

Now real estate and banks will be affected even worse. Huge job losses and employees defaulting on loans and credit. This is the worst scam ....

nikee said...

I would say, why Raju looked for this kind of departure, where all the monetary and non monetary stakeholder are in deep sank tank.

He could have hold the books for another 2 or 4 years, why he did it at this point in time.

I don't think Raju would be having some insane thoughts.

We need to understand the circumstances first. No investor would like to pull there legs with lower interests.

Anonymous said...

Things are not as simple as it appears.
Raju seems to be a very clevar man.
As Yogeshji said, It is possible that he or his near & dear ones could have made lots of money by buying put options or going short the last day.
The other possibility which I see is that Raju's confession is very well scripted, and a planned tactic. One has to read between the lines.
By admiting fraud, he has placed himself before the land of the law, but he has kept "windows" open for his future legal battel. He is ready to go to jail for time being, and will try his best to come out on bail.
One line in his confession says that he and his family has not received or used a rupee out of this irregularities. What he did was for the good of Satyam!
Indian legal system is such that high profile people are often not touched.
We hope this could be an acceptional case and "Raju Chiter" would be punished.


Anonymous said...

Yes, I 100% agree with you that Raju became a Billionaire overnight. I had this kind of thought gone through mind yesterday and I also had expected a Blog from you in this line. To be frank I even thought of buying at least 1000 shares of Satyam @ Rs.40/- if I had some money to spare.

Anonymous said...

Brilliant Yogesh. I never thought of this angle.


dharma said...

very valid point..i actually thought of blogging this today and uve raised it already

Unknown said...

Raju must have been under intense pressure. The Assets Managment companies who hold controlling interest,did not support him to bail out his another listed company Maytas Infra. That must have cheesed him off. He must have acceded to their requests in the past to show good results, dividend and by same token expeceted their help now, so that he could tie over the situation caused due to crash in Realty sector. Mind you, even Mytas Infra is a listed company. So one listed to another..... I think all so called enterprenures are un-necessarily crying haox. Most of them must have done their bit one time or the other. They all should support Raju to find out the real issues and help resolve in some way,rather than making noise. They also know what it takes to run a company like Satyam and its pressures.

Anonymous said...

This is the most plausible explanation for Raju's sudden confessional mode. I've already emailed this post to all my friends.

Never stop thinking out of the box Yogesh!

Take care & God bless.

Unknown said...

Yes ,You are 100% right. The thought came to my mind as soon as the News Channels came out with Raju's confession and the share price started crashing. He has become a Multi-Billionaire overnight, no doubt about it.

Kanika Gupta said...

Your post has given words to my thoughts. Right after I heard what happened (the stock prices tumbling), the first thought that occured to me was - imagine how much money could have been made by somebody who knew the prices would fall by engaging in short-selling. But, despite having this thought, I must confess that it did not occur to me that Raju could've made money by doing so. Kudos to your thought process!! I believe there must be some truth in there.

Anonymous said...

To be a gentleman also means to be a better man. Since the 19th century, the meaning of gentleman has exist. Simply just by walking her home, open the door for her, have her seated before you are etiquette of a gentleman the modern century!

Arbet said...


It is like killing two birds with one stone. By writing such a letter, it appears he has come out clean with all his past mis-deeds and at the same, would have made crores in derivative trading. Knowing Raju's, he would have definitely made a killing at the cost of poor honest investors.


Unknown said...

Hats off to you Mr.Yogesh.As you rightly said no one must have thought in these lines till now.A Telgi of stocks is born.This Telgi will also live a royal life in the prison while the law will take its own course & time to dispose off the matter.I can't imagine the mental agony of those employees of the Co. who have availed housing loan & have huge commitment of repayment.

We are yet to know the extent of the role played the so called reputed audit firm PWC in this sensational drama.I am afraid their chief has also played the Best Supporting Actor's role in this episode.If its true PWC should be BLACK LISTED.

Anonymous said...

Hi Yogesh..
> I really appreciate you for writing such an article onsatyam scam.Yu r
> verytrue there may be
> bigger people or something fishy behind all these. If he was really concerned
> about the share holders and the poor investors he would "t have given itduring
> market hours , that too without any previous notice. suddenly he became a
> hero.Thiskindof people should be punished so severely that nobody should dare
> to do such thngs in the future.You r right the poor invesotra nd the emoplyees
> whose life is in pain and uncertainity now. beze of one man. God also should
> punish such people. Let us all hope Nature willhave some remedy to this.
> Thanks onece again for writing openly about this. Shoking to note tht how
> manipulated r the people. This may dent the sentiment of investors .>
> Keep writing like this.God blessyou.

Chirag Joshi said...

Hi Yogesh,
If i am not affected by this scam than only i can think of any other motive behind this scam.

But what about our system which is not able to recognize it from last so many years.
Does this thought will not break the faith of small investors into the market??
We have seen so many scams in the market and it seems it is never ending story.
Who is taking care, or taking any preventive measures. Action taken after anything is of no or very little use.

Now i am praying to god to save near about 55,000 employees and carores of investors of satyam.

Thanks & Regards,
Chirag Joshi

Unknown said...

I believe what Mr. Raju said in his letter is correct, as a CMD you too have lot of challenges and pressure, by pledging his own shares of satyam he reduced his own wealth and tried hard to save the company which he created himself in 1989... but yes he lost..
After the debacle he made things public with courage.
This blah-blah by readers / happionaire is being done which anybody can do.
My suggestion to the discussion at blog : Try to open your own company, do business and make profits every year (along with facing economic & political challenges)... well it is easier said than done.

Tall Guy said...

Never really knew that people could profit from share prices going down.

The article is an eye opener.

Anonymous said...

Please dont try to analyze in this oversmart manner. I accept that you are good expertize in stock market concepts. Dont say that a person goes to jail, as he doesnot have accomodation and fooding, by doing some wrong thing. Probably, his consciousness might have not allowed to hide the truth, some more time. In frank, he has helped 50K people directly and some million people indirectly to have their food and good standard of living. Come on. There are some organizations like country club, gold quest, etc which still are looting money and they are not put behind bars. Even, when you speak of software companies, there are some US MNC set-up Companies in India, who are laying off employees without giving an indication to them. It might be one of the scandals, but dont curse him. To err is human, probably let us give him one more chance, as he only confessed and allow india to shine in IT Industry.

Anonymous said...

I am shocked to see how people can support someone like Raju. Look even a terrorist like Osama or Dawood hires people and faces hardship. Should we praise them too?

No need of sympathy for someone who has ruined millions of lives of investors and caused thousands of employees to suffer. He might have started the company - but it grew because of shareholder money.

He should be thrown behind bars and punished very harshly. He is a snake.

Yogesh, I am looking forward to your next book Cash The Crash. Am sure will get to learn lots of new things.

Anonymous said...

How can anyone support Raju? Please think before supporting fincnail criminals like Raju who have cheated millions of innocent people and ruined their lives.

Yogesh thanks a lot for being so open and out spoken about such things. I never knew money could be made when markets are going down. I'm sure this scamster did the same thing and he deserves life imprisonment.

No mercy for him should be there. Also when is Happionaire's Cash The Crash coming? I need to learn more and enjoy only your writing in finance.

anil said...

In our country the corruption has become a way of life. As the education is increasing more people has become aware that if you are ready to spent fractions of amassed wealth you will be able to enjoy the wealth thus created. Thus the Satyam saga will be repeated now and then unless the law makes difficult the life of people to enjoy and the punishment should be exemplary.
How the hell people here are expecting the Companies to adopt sound accounting principle when the people at the helm of our country is changing rules to show capital receipt as revenue receipts , current year expenses over different periods.I hope this is the case in a company and not with the figures provided by the governmaent with respect to our deficits and other figutres relating to Balance Sheet of our country.

Anonymous said...

I sent your post to all my friends on e-mail. They say that the truth is stranger than fiction and what you say is very likely to be the truth.

People like Raju should be given the harshest possible punishment. But I think government did good by taking Satyam over. Thousands of people will not lose jobs and I think stock will bounce back.

The people who support Raju should think about innocent investors and workers. Please think before supporting criminals.

Anonymous said...

Satyam is the shortened form of his father's name, Bair-raaju Satyanarayan Raju who was a wealthy landlord in the West Godavary District of Andhra. I think he's no more.

Anonymous said...

Dear Yogesh,

I was very lucky indeed to have read your book recently. I'm a PHD in education and still I have never read something so simple about finance.

I really liked your style of educating people. Am really waiting for your next book too.

I was very surprised to read your views on Satyam and never knew money could be made when stocks went down.

Please share more such ideas - I know you must be very busy, but please try to share all the exciting learnings you have in your daily life with us.

Another of your fans.

Anonymous said...

Hello from Dubai. Was reading about your analysis on the future of India and Middle East.

I was very impressed at how well you predicted the real estate bubble in Middle East and India more than a year ago. Your personal presence in the region has given you a good insight on these matters.

I wanted to know what are your predictions for the relations between India and Middle East and also what Obama means for the world.

May the brotherhood between nations grow.

Anonymous said...

Sir, I really want to meet you personally and learn from you. have been very impressed and influenced by your views.

Please let me know how. Nobody has thought the way about Raju the way you have and it truly wants me to meet you and learn more.

Anonymous said...

Genius at work! Please share more - really want to know more.

Anonymous said...

Excellent way of looking at the thief.

Am glad I read this post - it makes more sense than anything I have ever read before.

Am eagerly waiting for Cash The Crash.

Sonea Kanal said...

i think it so makes sense to what you said i was thinking about the same so as to why he put across the whole scam or whatever in public...u should put this forwsrd to SEBI ...

Rahul Malik said...

I find it difficult to believe, what you said Yogesh. Why will someone make money by surrendering himself, if he cant use that money to spend a lavish life ?

longterm said...

if really the organisation called sebi is truly functioning and purpose for which is formed it would have by now come with facts and figures i feel at sebi there is no application of mind evn by senior officers you can very well imagine how sebi went on spending more tahn one crore fees for lawyers to get to question the raju whereas local police on flimsy cahrge booked him and kept under their custody and giving lot of time for raju to amke plans .i think lal political involvement turning black money to white money
truth will never come.sebi can order investigation as to who all had earlier done the operations as you had mentioned and bring the culprits sebi will never do it especially after more tahn one year which will speak of thier infficiency

iamkhym said...

I think this proves to all those non-believers, that the best way to invest is not simply by looking at the balance sheet, but by understanding the business. Its true, in order to satisfy the needs of being a potential investor you should be eager to learn and really understand what it is all about and be wise enough to handle such things like this. Enlightened Wealth Institute