NSEL investors get SFIO mail
Probing agency sends detailed questionnaire to all 1,300 investors
The Serious Fraud Investigation Office (SFIO) has sent a detailed set of questionnaire to all the 1,300 investors in the National Spot Exchange (NSEL) as part of its investigation into the Rs 5,600-crore scam in the commodity exchange.
In the six-page questionnaire, the SFIO sought details from investors about various irregularities committed by the exchange and brokers.
The probing agency has asked investors whether they were given inducement by brokers to trade on the commodity exchange without giving full details of the products and risks involved.
There were allegations that some brokerage houses were mis-selling products in various ways like inducing investors to trade on the commodity exchange by offering high returns, offering illegal paired contracts, giving false assurances and not keeping commensurate stocks in warehouses against the underlying contracts. The SFIO also sought details of non-payment of value-added tax (VAT) by investors while taking trade positions.
According to sources, the SFIO is expected to submit a detailed report to other agencies probing the Rs 5,550-crore scam that broke out in 2013. Apart from the SFIO, market regulator Sebi and the Mumbai Police economic offences wing (EOW) based are also investigating the scam.
The SFIO is also probing Jignesh Shah-led Financial Technologies (India), which changed its name to 63 Moons Technologies, and its 18 subsidiaries and associates in connection with the NSEL scam.
The agency is probing the nexus between the defaulting entities and some brokers. The SFIO, which comes under the corporate affairs ministry, was ordered to probe the scam last October. The government, in February 2016, directed the merger of NSEL with FTIL, in a first-ever order to merge two private companies.
While the merger order has been challenged at the Bombay High Court, the matter of replacing the current FTIL management is before the National Company Law Tribunal (NCLT).
The government has been monitoring action taken by investigating and enforcement agencies for violations of law, criminal offences and default in payments to investors on the NSEL platform.
Investigations and other enforcement measures are being taken by the EOW, enforcement directorate (ED), Sebi and the financial intelligence unit-India (FIU-IND). Recently Sebi had sent show-cause notices to five brokerages houses for alleged mis-selling of products on the NSEL.
The notices were issued after Sebi conducted audit of the books of accounts for 2011-12 and 2012-13 of the five brokerages against whom complaints were filed with the EOW of Mumbai Police.
After a settlement crisis surfaced on the commodity exchange in July 2013, trading was suspended on the NSEL, with hundreds of investors hit by the scam.