Customers of some of the biggest names in the Indian broking fraternity who aggressively sold NSEL’s borrowing-lending racket are staring at large outstanding in NSEL. Clients of Anand Rathi Commodities stand exposed to over Rs600 crores while those of Indian Infoline stand to lose over Rs300 crore
The National Spot Exchange Ltd (NSEL) scam is starting to take an ugly turn for retail investors and high net worth individuals (HNIs) who had ‘invested’ through member-brokers into the borrowing-lending racket being run by the Exchange. As is now known, NSEL was an operation to channel money from investors through member-brokers, to a small group of 24-odd NSEL members-borrowers. For this “assured return” scheme, the brokers were collecting a juicy 5%-6% as brokerage, fees and commission. Neither the brokers, nor the investors, had done enough of due diligence and therefore, to their misfortune, found themselves to be lenders without any security, instead of investors in an assured return scheme that their brokers aggressively sold them.
Apart from channelling money from “investors” these member-brokers had also put in some of their own money into the scheme. The borrowers now owe as much as Rs5,380.53 crores in unsettled dues. But which member-brokers were on the other side of the racket, that is, which of the brokers were most aggressive in channelling the money? The biggest was Indian Bullion Markets Association Ltd (IBMA), a group company of Financial Technologies (India) Ltd, the promoter and 99.5% shareholder of NSEL. It is not yet clear, who the “clients” of IBMA were. Who were the other brokers?
They are some of the most prominent names of Indians stockbroking such as Anand Rathi Commodities, India Infoline Commodities and Geojit Comtrade. These people were being actively wooed by FT-MCX group in creating volumes in its various exchanges. While the names of members-borrowers who have defaulted are known, the list of member-brokers who funnelled the money for the borrowing-lending racket at 16%-18% fixed return has not been published so far. Here is the list of top 25. The complete list of those who owed money as well as those who were owed money from the NSEL system in early August, can be accessed at the end of this piece.
| Top 25 Members-brokers Owed To | Amount owed (Rs Cr) | Paid so far (Rs Cr) | Still owed (Rs Cr) |
| Indian Bullion Markets Association | 1159.55 | 24.94 | 1134.61 |
| Anand Rathi Commodities | 629.21 | 13.46 | 615.75 |
| India Infoline Commodities | 326.23 | 6.98 | 319.25 |
| Geojit Comtrade | 313.25 | 6.70 | 306.55 |
| Systematix Commodities | 277.74 | 5.94 | 271.8 |
| Motilal Oswal Commodities | 262.88 | 5.62 | 257.26 |
| MMTC | 220.08 | 4.70 | 215.38 |
| AUM Commodity | 214.71 | 4.59 | 210.12 |
| Phillip Commodities | 140.08 | 2.99 | 137.09 |
| Purvag Commodities & Derivatives | 132.58 | 2.83 | 129.75 |
| PEC | 123.39 | 2.64 | 120.75 |
| Emkay Commotrade | 100.54 | 2.15 | 98.39 |
| CD Commosearch | 94.71 | 2.02 | 92.69 |
| JM Financial Commtrade | 83.62 | 1.78 | 81.84 |
| Ventura Commodities | 67.2 | 1.43 | 65.77 |
| Arihant Futures and Commodities | 55.88 | 1.19 | 54.69 |
| SPFL Commodities | 55.47 | 1.18 | 54.29 |
| RR Commodity Brokers | 49.02 | 1.04 | 47.98 |
| Nirmal Bang Commodities | 46.64 | 0.99 | 45.65 |
| India Nivesh Commodities | 37.92 | 0.81 | 37.11 |
| Suresh Rathi Commodities | 37.7 | 0.80 | 36.9 |
| Chimanlal Popatlal Commodities Broker | 37 | 0.79 | 36.21 |
| Rainbow Commodity and Derivatives | 35.91 | 0.76 | 35.15 |
| Ludhiana Commodities Trading Services | 34.64 | 0.74 | 33.9 |
| Greshma Commodities | 34.59 | 0.74 | 33.85 |
Interestingly, among the names are two public sector companies Projects and Equipment Corporation and Metals and Minerals Trading Corporation. What business did these people have to invest in NSEL? Are their boards and respective ministries asking them any questions?
As of now there is a very slim chance of the member-brokers and their clients getting back much money.
On 14 August, NSEL had posted a detailed schedule of pay-in and pay-out from and to its members-borrowers in which it owed Rs5,380.53 to its member-brokers (top 25 disclosed above) while it had to retrieve Rs5,574.35 from other members. Moneylife analysed the payout numbers released by NSEL and compared it with the total amount that NSEL had to settle. We found out that only a total of Rs119 crore, or just 2% of the total dues have been paid out to members, in three pay-out instalments so far. In the three settlements, NSEL has paid just Rs92.12 crore, RsRs12.60 crore and Rs15.36 crore to members from the pay-in proceeds, on 20 August, 27 August and 3 September respectively. But as per the settlement schedule, by now it should have received Rs524.16 crore from those who owe NSEL and paid the same amount to members.
“Investors” who were lured into investing in NSEL’s racket by Anand Rathi, India Infoline and others, have every reason to be worried about not getting back their money in full. While NSEL expects to settle its entire dues by 11 March 2014, this seems unlikely. Are the brokers liable to pay their investors? Given how these brokers operate, they will neither own moral or actual responsibility to pay back their investors. It was just another product they had sold for fat commission.
Inside story of the National Stock Exchange’s amazing success, leading to hubris, regulatory capture and algo scam
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satish
operational head india
singapore media and channel group
we would like inform that what ever the allegations of embazzlement of shares by the broking which have been given for dematting thorugh the broking firm physical form the brokers in conveyance with nsdl and cdsl theof go any transfer the shares to broking house name when it is brought to the nsdl or cdsl they sherk the responisbility they in turm pass on the buckls to concerned stock exchanges we as an ivnestor and shareholder who have dematted our shares we donot the guiness of these organisation and even if it brought to sebi or stock exchange nobody gives what is duty of nsdl and cdsl and what is their responisbility is not at all clearly spelt out as such what for the institution that many creores of ruppes of shares are dematted and they are the controlling authority for all stock broking firm with outcontrolling them we donot know what the RBI and SEBi and stock exchanges had and what is link between the broking house and nsdl and cdsl is not at all know we request money life to explore it and bring and spell out what for these institution is functioning as an journalist we feel that sebi itself is spineless organisations they are just rubber stamp of nse bse and the nse bse are rubber stamp of big stock broker in loot for which there is no asker and teller and as such indian capital market itself is an precarious condition when it would burst and who would be held responsible is am million dollar question all the hard earned saving of share and mutual funds are managed by the capital market without accountability is pitiable case and even the cases we file against any broker no action is taken instead the instution creat and friction between the stock broker and their client and cases gose on dragging without an clear cut picture when you see the cases penidng in stock exchanges it would be running for years had only it goes to media and channel the matter would have closed and indian capital market would have been closed that is situation and as such there is no person in sebi and stock exchanges who is hving guts to apply law and punish the erring broking house because all the stock brokers are person who spend money for politiccian during election and the black money of polictican are routed to either to mauritus or dubai from there it comes into stock market as white money for all these thing s the brokers in conveyance with sebi and stock exchanges and RBi they do hence there should strict law abiding institution like moneylife who shoud question is our humble request we can bring this issue from our platform but it would speak bad about our country and present UPA II and our Primie Minister and Finance Minister and everybody would be trouble and there would market crash and inflation would be high and there would be overall catsrophe hence we are soft peddaling this issue we request money life to investigate this issue
Jignesh appears to be India's very own PONZI. What does he have to say about this? Someone should not mysteriously get an induced coronary.
What is the police doing - waiting for an FIR?
More interestingly, where is the money? Who has taken how much and spent it where? Did this fund the buying of the Luxembourg Exchange? At least credit el cheapo for thinking big.
The laws and rules that govern NSEL should derive from a simple and straightforward concept : all investors, whether large institutions or private individuals (small & big investors)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 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 ensure 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. That's why investing is not a spectator sport.
FIRST OF ALL THE GOVT DOESNOT HAVE AN CLEAR CUT POLICIES AND TO CROWN ALL OUR FINANCE MINISTER WHO EVEN THOUGH IS WELL EDUCATED AND COMES FROM AND RESPECTABLE FAMILY HE IS AN SADIST AND HIS MAIN INTENTION OR OBJECT OF LIFE IS SADDIST ATTITUDE HE WOULD FRAME THE RULES WHERE IT IS DIFFICULT TO IMPLEMENT BY THE NSEL BROKERS AND THERE BY THE OFFICIALS OF NSEL AND COMMODITY BROKERS JOIN TOGETHER AND FORM AN CARTEL CHEAT THE INDIAN INVESTOR IS MOTTO OF THE INDIAN CAPITAL MARKET THERE IS NO RULES AND REGULATIONS EVEN IF THERE IS ANY IT CANNOT BE IMPLEMENTES IS SITUATION INDIA
The world will be a better place and reading about NSEL will enable us focus on the pain and greed of market participants without the added pain in the eye of reading your points in Capitals!
when the brokers cheat thier client there is no recourse because sebi nse bse and nsdl and cdsl form an cartel and they never do any justice to indian investors even though they publish and telecast investors protection fund but this totally wrong or misinterepted investor protection fund but vice versa they are stoong to erring broking houses and now nsel had cheated the broking house this shows that above all this fraud there is an super natural power which we call as GOD who watches all our deeds and punishes at appropriate time with regard to India infoline they cheated me inspite of my repeated mails they have not done any justice and now they themselve have been cheated and we feel now they would find the pinch of the blood and now if they have some soft heart they would consider our case and do tthe needful thing may the GOD give them good thought and consider my case and do needful thing
The roles of the respective Union Ministries of Agriculture, Consumer Affairs, Finance including the possible involvement of the mantri-shantri-neta-babu nexus needs to be probed by the ED, CBI, SFIO jointly.
The roles of the respective Union Ministries of Agriculture, Consumer Affairs, Finance including the possible involvement of the mantri-shantri-neta-babu nexus needs to be probed by the ED, CBI, SFIO jointly.
[yes again i repeat FYI, i've highest respect for them]
When Jharkhand scam accused were stakeholders, investigated, jailed, 2009, ED et all investigations, records as per RoC
& the intricate manipulations now exposed.
Why BANKS ARE MISSED OUT FROM ADVANCING LOANS TO WR's [warehouse receipts] & TREATED IT AS 'PRIORITY FINANCE' UNDER THE NORMS!? What were the auditors doing?
As of now no IBMA stakeholders details are submitted to FMC!? Why?
However, as regards e-series a firm known to me - highly respected by me - Sharp & Tannan, asked as third party audit, had conducted the audit but they have also reported backlog of settlement. Their mandate was e-series discrepancy, not beyond that.
How many banks,in view of NSEL scam conducted audit & HAVE COME OUT WITH REPORT?
I only know Kotak Mahindra taking possession of stocks financed & moving it out after audit. [other fronts KM we will leave it aside.]
FYI, NBHC, managing stocks for NSEL, in June/July never EVER issued WR's? Banks did finance it.
Out of 5.5KCR bank funded is 4.2KCR!? NHBC states, further stating that it only holds 65Cr, Sept 5, as the warehouses were given back to NSEL, short of saying with quantity & quality.
FYI, why not find out banks cummulative lendind past 5/6yrs to NHBC WR's? In Kerala, a commodity trader [i'm not talking NBHC] had claimed insurance of burnt 'jeera' stock kept in warehouse, investigation revealed it to be groundnuts, most of it discarded shells of oil co's. bank finance stock.
An elderly cousin of mine was a Branch Mgr; Nationalised BK, in Vidarbha region, she was flabbergasted to know that all 'cattle financed' deaths were always reported on Monday morning, [post noon Sat, bank, branch, shut.]By Monday eve obviously no caracas to ascertain!?
She stated to all borrowers - call me at midnight, my officers will come & undertake 'panchanama'. Thereafter there was not a single report of Monday morning.
So, MR. Nagesh Kini, WILL YOU PETITION YOUR LOCAL MP, MLA, MLC, CORPORATOR, OHHHH sorry your RTI & GET 13,000 INVESTORS MONEY BACK?
BY THE WAY DO NOT FORGET TO SCAN A COPY TO ME TO MY MAIL, in the event.
Regards,
If he is so 'certain' about his facts, he might as well report them to the appropriate authorities instead of wasting his and every readers' time !
Even after invoking the RTI, the concerns need to be addressed by taking them up with the proper forum and not raving and ranting in ML columns on and on!
Even now the IT dept is interested in ascertaining if there is a tax liability that has been disregarded, ED is concerned with whether this money was channeled offshore to participate in overseas futures exchanges.
Is tracking the funds so difficult. If at some stage cash has been withdrawn, the trail could have gone cold, but surely such large withdrawals would have raised alarms and those who withdrew the cash can be interrogated.
Instead of going after the money, other agendas are being pursued, or thats what it looks like.