New Delhi, May 1 -- The Gensol-BluSmart crisis has drawn corporate fraud in India's startup ecosystem into the spotlight. It has sparked a debate over a 'fake it till you make it' culture and whether it's driven by sheer greed, naive optimism or intense pressure to keep the company's stock on an ever-rising curve.

While the causes remain debatable, the consequences of corporate fraud follow a predictable path. Once discovered, law enforcement agencies and regulatory bodies spring into action. Probes are launched, notices are dispatched and litigation ensues.

One may expect these proceedings to target executive directors, who are responsible for running the business and its affairs. But that is not the case. They invariably implicate all...