Bonds, Currencies & Commodities
Financial Technologies silent about NSEL scam in its AGM agenda

Financial Technolgies' notice for AGM does not even mention NSEL. Meanwhile, Ravi K Sheth, a longtime director and confidant of Jignesh Shah, has decided not to seek re-appointment

Financial Technologies (India) Ltd (FT), the promoter of scam-ridden National Spot Exchange Ltd (NSEL) does not even mention the name of the Exchange in the agenda for its upcoming annual general meeting (AGM). This is surprising especially as its main promoter, it is the responsibility of FT to answer questions arisen about the crisis at NSEL, especially since NSEL contributed more than Rs120 crore in profits to FT last year.

 

The Jignesh Shah-led financial software company and promoter of several exchanges in India and abroad such as MCX, MCX-SX, DGCX in Dubai etc. is holding its 25th AGM on 25 September at Chennai. The company has sent shareholders three notices dated 22nd August, 27th August and 30th August in a file on a single day.

 

Interestingly, Ravi K Sheth, director of FT for almost 20 years – going back to 1994 -- has become the latest to resign from the company. Sheth is not seeking re-appointment and FT has decided not to fill the vacancy created by his resignation.

 

On the other hand, N Balasubramanian, who was appointed as additional director on 22 August 2013 is seeking appointment as director. Balasubramanian, the former chairman and managing director of Small Industries Development Bank of India (SIDBI) was also associated with the Planning Commission in preparing five-years plan documents, focussed on SME, as the chairman of the sub-committee.

 

Even since the NSEL crisis started, directors have been running away from various companies of the group like rats deserting a sinking ship.
 

Sr No

FinTech

NSEL

MCX

1

Ramanathan Devarajan

Shankarlal Guru

Venkat Chary

2

Padmanabh R Barpande

Ramanathan Devarajan

CM Maniar

3

CM Maniar

BD Pawar

Lambertus Rutten

4

N Balasubramanian

Shreekant Javalgekar

Padmanabh R Barpande

5

Ravi K Sheth

 

Prakash Apte

6

 

 

Shvetal S Vakil

Directors left in the company

1

Jignesh Shah

Jignesh Shah

Jignesh Shah

2

Dewang Neralla

Joseph Massey

Joseph Massey

3

Manjay Shah

 

Paras Ajmera

4

Chandrakant Kamdar

 

RM Premkumar

5

 

 

P Satish

6

 

 

Ravi Kamal Bhargava

7

 

 

Dinesh Kumar Mehrotra


At present, FT board comprises its chairman and group CEO Jignesh Shah, whole time directors Dewang Neralla and Manjay Shah (Jignesh’s Shah brother) and Chandrakant Kamdar.

 

Since the middle of July 2013, trading in NSEL has been suspended. NSEL has failed to make payouts to investors and failed to recover money from those who were supposed to make pay-ins. It now appears that there is not enough stock of commodities in the warehouses of NSEL against which warehouse receipts were issues. In August 2013, trading in e-series was also suspended. This was of concern for large number of investors who had purchased e-series products like e-gold.

 

Following the crisis, FT’s shares have crashed from a high of Rs870 in May to Rs114 today. The shares of MCX have fallen from a high of Rs1,015 in May to a low of Rs238 in August. It has shot up to around Rs400 now, hitting the upper circuit daily for the past two weeks. There are rumours that MCX will change hands.

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COMMENTS

Vickram Jaitha

3 years ago

The concept of e-gold was introduced for easy trade and safety. Neither can the NSEL investors trade e-gold nor are they feeling safe. What is the Government doing to protect thousands of investors who have invested in e-gold and e-silver?

The laws and rules that govern NSEL should derive from a simple and straightforward concept : all investors, whether large institutions or private individuals (big and small) should have had access to certain basic facts about NSEL prior to investment and so long as they hold the investments. To achieve this, Government should have insisted on NSEL to disclose meaningful financial and other information to the public. This would have provided a common pool of knowledge for all investors to use to judge for themselves whether to buy, sell, or hold a particular commodity like e-gold or e-silver. Only through the steady flow of timely, comprehensive, and accurate information can people make sound investment decisions. Unfortunately, this did not happen in the case of NSEL.

The result of this information flow is so important to our nation's economy. To insure that this objective is met, the Government should continually work with the market participants, including especially the investors, to listen to their concerns and to learn from their experience.

The Government must oversee the key participants in NSEL, including brokers and dealers, borrowers, investment advisors, and mutual funds for maintaining fair dealings, and protecting against fraud. Crucial to the effectiveness in each of these areas is its enforcement authority.

The world of investing is fascinating and complex, and it can be very fruitful. It is not a spectator sport.

Vaibhav Dhoka

3 years ago

We can label this as Technology Slip/Scam.In days to come we have to face many such SCAMS.

nagesh kini

3 years ago

Apparently FTL is selective in mailing the Annual Report to its stakeholders - I've not received any Notice for the AGM nor the Accounts.
What about good Corporate Governance practices? If the Directors fail to disclose why have the Statutory Auditors not said it by qualifying their Corporate Governance Report?

REPLY

Hemant

In Reply to nagesh kini 3 years ago

Well i with my family holds FTL shares in 4 different folios & have received AR by email in all a/c's.Even on BSE web site it is there.

nagesh kini

In Reply to Hemant 3 years ago

Neither have I received any by email. that doesn't answer my corporate governance concerns?

R Balakrishnan

In Reply to nagesh kini 3 years ago

The R&T, Karvy is the one who sends this mail.

Nilesh KAMERKAR

In Reply to Hemant 3 years ago

There are hundreds of listed companies who have NOT uploaded their annual reports on their own websites or with the stock exchanges.

Neither have they sent annual reports through email.

V K JAIN

3 years ago

It would be interesting to see the effectiveness of new Companies Act to ensure that Directors and Independent Directors act as per the new statue or else face the music. Resignation does not absolve directors-whether dependent or independent- of their acts of omission or commission.

Virendra Jain

SAT quashes SEBI order against NSDL in IPO scam

The irregularities during 2002 to 2006 by NSDL related to cases of IPO scam and trading in unlisted shares of DSQ Software upon irregular dematerialistion

The Securities Appellate Tribunal (SAT) has quashed an order passed by Securities and Exchange Board of India (SEBI) in December 2008, but implemented only in July 2011 after being dismissed initially as 'null and void' against National Securities Depository Ltd (NSDL).

 

SAT had passed a similar order last month after hearing another appeal filed by the  NSDL against another order from SEBI in the same case.

 

In its latest order, dated 30 August 2013, the Tribunal observed that the facts in the earlier appeal filed by NSDL were similar to facts in the present case, and therefore it directed that the SEBI order in the present appeal be also "quashed and set aside".

 

The two SEBI orders, passed on 4 December 2008, asked NSDL to conduct an independent inquiry to fix individual responsibility for failure at the Depository in the wake of initial public offering (IPO) and demat scams between 2002-2006. NSDL board was also directed to conduct an independent audit of its systems and operations to identify the remedial measures.

 

After hearing NSDL's appeal against these orders, SAT last month ruled that independent probes have already been carried out by depositories and remedial measures have been taken after ascertaining that there was no individual complicity.

 

"Therefore, at this belated stage directing the appellant (NSDL) to institute fresh inquiry to fix individual accountability...Is wholly unjustified and unreasonable. Accordingly, we quash and set aside the impugned order dated December 4, 2008.

 

"This order, however, will not come in the way of the respondent to seek compliance of any other remedial measures that may be suggested by the respondent with a view to strengthen the Depository system," SAT had said in its order.

 

The orders were originally passed by a SEBI committee in December 2008, but were later dismissed as "null and void" by the board of the market regulator.

 

However, an intervention by the Supreme Court in July 2011 forced the market regulator to revive the matter and SEBI's board on 28th July that year took an unprecedented decision of reviving the charges declared as "non-existent" in the past.

 

Subsequently, SEBI implemented the orders and served them to NSDL on 29th July  for compliance, which included an independent audit of systems and operations within six months.

 

This was the first instance of SEBI revisiting an issue previously dismissed by it, as also an unprecedented case of the regulator being open to a report, where its own role had been criticised.

 

The irregularities during 2002-06 by NSDL related to cases of IPO scam and trading in unlisted shares of a company DSQ Software upon irregular dematerialistion.

User

CVC says 113% surge in corruption complaints in 2012

Out of the total of 37,208 complaints received by the CVC, the highest of 10,337 were received by the Railways, 7,336 by banks, 4,228 by GNCTD, 3,757 by I-T department and 3,487 were related to Urban Affairs

There has been a quantum jump in the number of complaints of corruption received by the Central Vigilance Commission (CVC) last year as against those in 2011.

 

The Chief Vigilance Officer (CVO), who acts as distant arm of CVC, of Railways has received a highest of 10,337 complaints of alleged corruption against its employees and in projects being executed by the largest public sector employer as compared to other departments, says an annual report for 2012 of the transparency watchdog.

 

"The Commission received more than 37,000 complaints during 2012 as compared to 17,407 complaints in 2011 which is 113% more than that of previous year," it said.

 

Out of the 37,208 complaints received by the CVC, 33,308 were disposed of during 2012 and 3,900 complaints were pending at the end of the year, said the report tabled in the Parliament recently.

 

"In majority of complaints, the allegations were found to be either vague allegations or containing administrative issues. The Commission also received a considerable number of complaints against public servants working in the state governments who do not come under the jurisdiction of the Commission," it said.

 

The CVC has received 10,142 complaints in 2008, 14,206 in 2009 and 16,260 in 2010. Of these, 10,188 were disposed of in 2008, 13, 919 in 2009 and 16, 211 in 2010 respectively, the report said.

 

The Commission also complained lack of staff despite "manifold increase" in volume of its work.

 

"Despite the manifold increase in the volume of work being handled by the Commission, there has been no increase in the staff strength. Complaints received in the Commission are processed electronically through Information Technology enabled core processes to ensure speed and transparency," it said.

 

Out of the sanctioned strength of 296, the CVC has 244 officials in position.

 

According to the report, CVOs of various government organisations have received as many as 48,553 complaints of alleged corruption between January and December 2012. Of these, a highest of 10,337 were received by the Railways, 7,336 by banks, 4,228 by Government of National Capital Territory of Delhi (GNCTD), 3,757 by Income Tax department and 3,487 were related to Urban Affairs (Urban development or DDA among others).

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COMMENTS

kakarla rangaiah

3 years ago

cvc will receive a flood of petitions provided it gives vide publicity regarding their address, and web site

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