The Mumbai EOW had filed a charge sheet against FTIL promoter Jignesh Shah in the Rs5,600 crore NSEL scam
The Mumbai Economic Offences Wing (EOW) of Mumbai Police on Monday filed a chargesheet against Jignesh Shah, promoter of Financial Technologies India Ltd, in connection with the Rs5,600 crore National Spot Exchange of India (NSEL) scam.
Earlier, in May, the EOW had arrested Shah in the NSEL scam. NSEL, promoted by Shah-led Financial Technologies group, is already being probed by various other regulators and investigative agencies with regard to a Rs5,600-crore payment default and persistent violations of various regulations.
Last week, the Mumbai High Court had deferred a bail plea by Shah till 5th August. The Mumbai EOW had to file its chargesheet by that date.
This will be the second charge sheet filed by EOW in the NSEL scam.
The first chargesheet was filed in January 2014 in the Maharashtra Protection of Interest of Depositors court, in which it had named former NSEL managing director and CEO Anjani Sinha, former head of finance Amit Mukherjee, former chief of warehouse operations Jay Bahukhandi, NK Proteins’ managing director Nilesh Patel, and Lotus Refineries’ chairman and managing director Arun Kumar Sharma.
Last year in September, EOW of Mumbai police searched 184 places across 16 states, including residences of Shah, and Joseph Massey, the then managing director and chief executive of MCX-SX.
In December 2013, commodities market regulator Forward Markets Commission (FMC), has termed Shah, FTIL and two other directors, Massey and Shreekant Javalgekar as 'unfit' to run Multi Commodity Exchange of India Ltd (MCX), the country's largest commodity exchange. The commodity market regulator also held FTIL and its directors, Shah, Joseph Massey and Shreekant Javalgekar responsible for Rs5,600 crore payment crisis at NSEL.
FMC had said, Shah was practically the 'highest beneficiary' of the fraud perpetrated at the NSEL Exchange. "It is because of the huge profit of Rs125 crore (approx.) earned by NSEL during FY 2012-13 that the value of the shares of Jignesh Shah in FTIL shot up manifold giving him the benefit of a spectacular market capitalisation of his investment in FTIL running into thousands of crore of rupees. Jignesh Shah, as the promoter of FTIL and NSEL has misused his position to create a confidence in the minds of the participants regarding the legitimacy of the business and its operations in the exchange platform of NSEL. Shah consciously used his position to represent to the public at large about the attractive features of the contracts being traded on NSEL platform while taking no steps to introduce any effective governance mechanism including risk management, due diligence, assured collaterals etc., to ensure the legitimacy of his claims and to prevent frauds," the Commission had said in the order.
As long as Nifty does not break 7,650, an uptrend is likely
The broad Indian market indices—S&P BSE Sensex and NSE’s CNX Nifty—recovered on Monday after a decline of over 2% in the past two trading days. In our Friday market closing report, we mentioned that Nifty and Sensex may put in a short rebound later in this week. The rebound came on Monday itself. Both the Sensex and Nifty opened and continued to trade above Friday’s low and closed near the day’s high. The 30-share Sensex closed at 25,723 (up 242 points or 0.95%) shortly after hitting an intra-day high of 25,754, while the 50-stock Nifty closed at 7,687 (up 84 points or 1.12%) minutes after touching a high of 7,695.
In the last month alone, SEBI started action in a number of cases, where close to Rs5,000 crore has been raised through redeemable preference shares and similar instruments by money circulating companies
Market regulator Securities and Exchange Board of India (SEBI) has begun coming down hard on entities raising public money illegally through redeemable preference shares (RPS) and similar instruments, as also through their sister concerns despite being barred from the markets.
Action has been initiated in a number of such cases in the past one month, wherein close to Rs5,000 crore has been raised through issuance of such securities.
These cases are other than those involving illicit 'collective investment schemes' (CIS). SEBI has also initiated action in many CIS cases and companies that raised close to Rs4,000 crore have been asked to wind down their schemes.
In connection with violation of capital market norms in issuance of RPS and other securities, at least seven companies, as also their promoters and directors, faced strict action by the SEBI in July itself.
These companies were found to have issued debentures and preference shares without complying with the necessary regulatory laws.
Another eight companies faced a SEBI crackdown last month for violation of CIS regulations, and these include some companies based in Kolkata.
There are some sister concerns of companies that were earlier barred from raising funds as well as from launching investment schemes earlier, shows an analysis of recent orders passed by SEBI.
The regulator in one of its orders has now restrained Saiprasad Corp from raising funds from the public through its schemes (http://www.moneylife.in/article/sebi-bars-sai-prasad-corp-directors-from-raising-funds-through-schemes/38203.html). The regulator had last year barred two group companies, Saiprasad Foods and Saiprasad Properties, from raising funds from the public.
Similarly, on 28th July, SEBI prohibited Nicer Green Housing Infrastructure Developers from raising further funds while it had issued a restraining order against another group company, Nicer Green Forest in March last year.
In one of its biggest crackdowns, SEBI has barred Pancard Club India, which had raised more than Rs3,000 crore from nearly 25 lakh investors. (http://www.moneylife.in/article/sebi-asks-pancard-clubs-to-stop-collecting-money-from-investors/38276.html)
SEBI had also cracked down on firms raising money from the public by issuing securities such as redeemable preference shares and non-convertible preference shares, among others, without following public issue norms.
During last month, SEBI had prohibited Kolkata-based companies — PAFL Industries, Sunplant Forgings and Sunplant Constructions — from raising money through issue of securities till further directions.
Similar orders were also issued against Mega Mould, which had raised Rs716 crore from investors and Wasankar Wealth Management (Rs12.89 crore), during the month.