Brokers who have an inglorious record of dealing with stock investors are demanding money from, and action against, NSEL. However, it is not only the Exchange that is to blame, but brokers who have mis-sold the NSEL product to investors. They too are liable for legal acton by their clients
Several brokers and their associations are asking the government to take action against National Spot Exchange Ltd (NSEL), which they claim has the financial obligation for paying 
back to them. However, the fact is that it was brokers, who lured investors in the first place to get risk-free gains from NSEL. Thus, it is investors who should first take action against brokers for giving them the contract note of NSEL. Contract note is certainly a legal document in an exchange that was sanctioned to run by a ministry, in this case, the Ministry of Consumer Affairs.
Commodity Participants Association of India along with Association of National Exchanges Members of India and BSE Brokers Forum has also threatened that they will move court if commodities market regulator Forward Market Commission (FMC) cannot give guarantee on repayment. While that may be a valid course of action, the investors have valid grounds for suing their broker for defaulting on their obligation.
The reason is simple. Investors were offered the NSEL product with promises of high fixed returns by the brokerages. Investors primarily gave money to brokers for investment. Therefore, in the first place, it was the brokers' duty to check and verify what they were selling, which they failed in the NSEL case. Crying foul about the functioning of the Exchange is valid but can the brokers escape their role in this?
These brokers, pretending as if they do not know anything about NSEL operations, are now expressing concerns over quantity and quality of commodities lying in warehouses controlled by NSEL. Brokers are claiming it was NSEL’s responsibility to verify stocks. Brokers have even demanded that the government should take over Financial Technologies India Ltd (FT) the promoters of NSEL as well until the mess is cleaned up.
Kirit Somaiya-led Investors’ Grievances Forum (IGF) went further. IGF has filed a complaint with the economic offences wing (EoW) of the Mumbai Police against NSEL. The Forum while demanding police to file first information report (FIR), accused NSEL of cheating, fraud, forgery with the victims being 17,000 small farmers and investors. In all fairness, IGL should add brokers to the list of those who have sold a dubious product to investors.
Interestingly, a circular from NSEL says, “Giving / taking delivery of commodities in ‘demat mode’ should be directly to / from the ‘beneficiary accounts’ of the Clients except delivery of commodities to a recognised entity under the approved scheme of the Exchange.” Did the brokers ensure this, clients can ask.
The NSEL circular also says, “Member of the Exchange shall make the Client aware of…the precise nature of business to be conducted, the risk associated with business in trading in contracts permitted in the exchange for Spot Trading, including any limitations on that liability and the capacity in which the Member of the Exchange acts and the Client’s liability thereon.” Was this done by brokers? Most certainly not.
The NSEL circular also says, “The Exchange Member shall not furnish any false or misleading information or advice with a view to inducing the Client to do business in particular contract or contracts and which shall enable the Exchange Member to profit thereby.” Making presentations to clients, which gives the impression that NSEL contracts offer a high fixed return while the funds are secured against goods, is clearly a violation of members’ responsibilities, in the eyes of investors.
The brokers who are leading the charge do not exactly have a shining record of treating their customers fairly in the stock market. From forging Power of Attorney frauds to unauthorized trading, to illegal selling of shares, they have indulged in multiple misdemeanors. All of them have got away too, thanks to a grievance-handling system of the exchanges and the market regulator that is loaded against investors.
Inside story of the National Stock Exchange’s amazing success, leading to hubris, regulatory capture and algo scam
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operational head india
singapore media and channel group
first of all if you want to sue the govt department its is an long drawn process because this clan is so attocratic that they would put all the bottlenecks in various corners and we cannot get justice as such instead of fighting with govt this matter should be made public and it should be published and telecasted in all channel about how the indian administration is and then this would eye opener for all and once this done naturally the opposition party and well wishers of our countries Like Shri Anna hazare and Shri Arvind khejirwal and eminenet Economist like Shri Subramanya Swamy would take up the case unless until it is raised in parliament we cannot get justice otherwise we have one more source instead of confronting with govt and sebi we can appeal to stock brokers on behalf of the investors and ask them to make good of the losses which is feasble solution
operational head india
singapore media and channel group
you cannot expect any justice from Govt Departments especially in the financial service sector and finance department where PM and FM are directly responsible and as far Govt servants are concerned previously there was only allegations of accountability but now there no honesty integrity and dependability when an files from Govt of india with coalgate scam there had been files missing this shows how they keep the records similarily the Income tax returns filed by citizen of india where found bundles in the roads this shows what is the scanctity that govt records are kept and now the govt and chief justice of india should take strict measure if any govt department found guilty the concerned department head and subordinates should be dismissed and their pension and other benefits should be stopped if this is done for dozen of govt officials naturally there would be total conrol we cannot say all the officials are corrupt but some officials are corrupt if the other officials raise their voice their promotion and other benefits is blocked hence they are helpless we need supreme court intervention is sebi and nse bse and restore justice to investors and this organisation should be above corruption
OPERATIONAL HEAD INDIA
SINGAPORE MEDIA AND CHANNEL GROUP
OUR GOVT IS NOT SHAMED OF ANYTHING THE PRESENT UPA GOVT HEADED BY SHRI MANMOHAN SINGH IS FULL OF CORRUPTION AND WHEN WE BRING TO HIS NOTICE HE WOULD SAY I ACCEPT THAT THERE HAD BEEN CORRUPTION AND HE WOULD SET UP AN COMMITTEE AND HE HIMSELF WOULD TRY TO MANIPULATE ITS THE PEOPLE AND OFFICIALS WHO SHOULD BE GOD FEARING AND THEY SHOULD THINK ABOUT THEIR SIBBLINGS FUTURE AND THEY SHOULD THINK AND DO AND THE STOCK BROKERS SHOULD TRY TO BREAK THEIR STIGMA OF LOOTERS IF THAT ONE COMES INTO THEIR MIND AND THEY WORK WE ARE SURE INDIA WOULD PROSPOUR AND ACHIEVE THE DEVELOPED NATION
opeartional head india
singapore media and channel group
as far satyam is concerned the chirman Ramalinga Raju confessed about cash manipulation but in this case of jignesh shah with out physical stock he had traded and the stock brokers took advantgaes of this situation and made good bucks and now also in equity market in F&O segment without stock they trade and its the brokers at risk for which they have good brokerage and as such there is no need for SFIO investigation like satyam in this case all the stock brokers should be called and the investors should appeal and get the losses compensated because the broker in india after the advent of digital trading if the client is offline client the stock broking firm themself trade in client name in online trade and make money and vie versa as such there cannot be any physical loss for stock brokers and its loss out of profit and stock brokers if they wish they can make good of the losses
operational head india
singapore media and channel group
instead of sueing the broking community as whole as an investors of affected by this episode would collectively appeal to brokers to make good of the losses as this loss is only out of the profit and as such this would pinch thier purse on behalf of investors i earnestly appeal to stock broking community that without investors there cannot be market and similarily without broker there cannot be stock market please kindly consider us as your brothers and sisters and make good of our losses be kind hearted after all we are not wealth person like stock broker as earnest appeal on behalf of investors we would request you help us rather find faulting each other
Yes but in dubious lists of Gujarati's after Harshad Mehta,Ketan Mehta,Nimesh Kampani now we have Jignesh Shah.How can these smart Guju's feel thatt they will steal big & nobody would watch.Blot on the community/state/country.FT an iconic company in doldrums.Rgds Mahesh Bhatt
If this is correct - those Broker's / Broking Firms should be Penalized.
I for one know & state from personal loss - that IIFL / IICL is a company which has cheated / conned / defrauded me personally. Their Application to RBI for Banking Licence should NEVER be considered as the company & staff (who defrauded me) should be Penalized & money recovered from them by selling their assets & personal property also. I have filed case also against them. ON THE FLIP SIDE - those brokers who were conned by NSEL should be allowed to go free.
operational head india
singapore media and channel
Its very diffcult because the broking firms MOL and IIFL are real cheats and they have good political clout infact in one these companies the finance minister mr.Chidamram son Karhik Chidambaram is an partner and due to his patronage neither sebi or stock exchanges of india nor RBi would take any action and now after this episode after so much of voices we can expect some redressal measure otherwise i have to expose this issue from our platform in which case the countries image and indian administration would be collapsed and this an stigma to our country keeping countires image we are just mailing and writing in this blog let it reach the concern person if the brokers like IIFL chairman like Nirmal jain if they have heart and real interest on the affected people they could help instead of depending on sebi and stock exchanges its high time we fix an timing with chairmans of these broking firms and get our problem solved hope this would solve all our problem instead of seeking govt help we cann fall on the feet of our cheater who we are sure to have heart as they also have their family and they knew our plight and try to help us this one suggestion
Its funny this article about suing brokers. I though a magazie like moneylife would be well informed about how financial markets work, but this is certainly a disappointement. No broker in any country in the world can be blamed if an exchange defaults. In this case, it was purely a fraud being done at the exchange's end. Further, there is no way brokers could have gone and personally tallied all the stock. That is the job of regulators who were clearly caught napping as is always the case in India.
Regarding mis selling, people should have the basic knowlegde of products they are investing in. If you don't understand the product the just stay away. First people get greedy and then blame others. This is very wrong.
Moneylife should research first before printing such articles.
operational head india
singapore media and channel group
even when MGO like money life bring the brokers are not bothered because they have good clout in finance ministry and these are people who give money for election and as such its only the investors to be blamed but due the eagerness in earning more money they fall pray as an investor we pray to broking community as whole to have kind heart and think the investors as brothers and sister and try to make good of the losses rather pinpointing mistake who is right who is wrong and blaming the govt is waste of time so earnest appeal to all broking community please kindlty consider the investors plight let not all the curses of the investors fall on your next generation please be kind enough to solve this issue we trust if you wish you could help us without pinching your purse
I request that all investors who have deposited money at arecognised stock broker must approach to SEBI and lodge a complain against the broker. These brokers should have verified that whether the goods are available in the warehouse or not.
operational head india
singapore media and channel group
even if we give any complaint to sebi or aany stock exchanges india the investors are the fools because all these looting are hand in glow with sebi and its the officials of sebi who lure the broker to cheat customer and they need not be bailed out by govt because all HNI investors are linked to central minsiter and state minister and their black money is rotated in the stock market and innocent small investors are looted and cheated and govt should come out and bailout the small investors is earnest appeal on behalf of our group
operational head india
singapore media and channel group
as far the stock brokers are concerned they main motto is cheat the customer and thrive and they donot have any ethics or morale that they living on others people curse and that is reason that community had never raisen and that also one the reason why the stock market is in the hands of few choosen others are not prepared to take up this profession even though if they do honestly and with good integrity they can do good business but they have no morale hence its in the hands of choosen few who loot the people and they also doesnot grow
Request the Investors grievance forum to convince the brokers to give a little consideration to small investors. If HNI investors can accept 2.5% instead of 3% per week, Small investors would get 10% instead of 3% per week.
singapore media and channel group
all these are real gimmick the payment would be made to HNI investors who are all ministers of central govt and big industrialist and they pretty well knew this catstrophe and as such small investors would be left in traught is my surmise
no need to go to the exchange monies will be sorted out by these money minting freaks.
operational head india
singapore media and channel group
the brokers are considered as cheats and they main intention right from the inception of the stock market this attitude had not changed and as such the governing bodies such sebi and nse bse are also puppets in the hands of big broking firm and they never implement the law and once if we expose this episode how the rule makers are rule brakers this would speak very bad about indian administration because even the chairman of sebi is an IAS and when he himself party to the law brakers all the departments of indian administration would also lack this and total indian adminsitration should be blamed and as such main accuse goes to nse bse and sebi for not implementing their rule infact they are afarid of stock brokers mainly because the fringe benefits they derive after their retirement lucartive post in stock broking house inorder to hush up the case and drag the case and that is reason why in delay in going for media presentation we need the matter to be solved without media and without hitting the market
ONE BASIC QUESTION IS A STOCK EXCHANGE IN INDIA HAS COMPULSORILY GIVE SOME THING CALLED TRADE GAURENTEE IN NSEL CASE THEY HAD THIS TRADE GAURENTEE IT MEANS THAT EXCHANGE IS RESPONSIBLE FOR THE TRADES & SETTLEMENT THAT TAKES PLACE ON THE SYSTEM OF THE EXCHANGE. SO THE SAME IS THE CASE WITH BSE OR NSE . TOMMOROW IF BSE OR NSE DEFAULTS THE BROKERS CANNOT BE BLAMED AS THE EXCHANGES PROVIDE FOR GAURENTEE. IT IS RESPONSIBLE OF THE EXCHANGE AND THE MINISTRY OR THE AUTHORITY WHICH COMES HAS THE AUTHORITY TO MONITOR.MORE OVER THE GOVERNMENT WAS SLEEPING ALL THROUGH THIS YEARS WHEN A LEGAL EXCHANGE IS PROVIDING 45 DAYS CARRY FORWARD TRADE OPENLY THROUGH THE SYSTEM AND THE EXCHANGE SAYS IT HAS THE PERMISSION FOR THE SAME. THE MINISTRY SHOULD HAVE ALLOWED 4 MONTHS TIME TO THE EXCHANGE TO BRING THE ENTIRE CARRY FORWARD POSITIONS TO ZERO (WITH NO FRESH POSITIONS TO BE CREATED)INSTEAD OF ABRUPTLY STOPPING THE TRADING CYCLE AND CREATING THE PANIC.
ONE BASIC QUESTION IS A STOCK EXCHANGE IN INDIA HAS COMPULSORILY GIVE SOME THING CALLED TRADE GAURENTEE IN NSEL CASE THEY HAD THIS TRADE GAURENTEE IT MEANS THAT EXCHANGE IS RESPONSIBLE FOR THE TRADES & SETTLEMENT THAT TAKES PLACE ON THE SYSTEM OF THE EXCHANGE. SO THE SAME IS THE CASE WITH BSE OR NSE . TOMMOROW IF BSE OR NSE DEFAULTS THE BROKERS CANNOT BE BLAMED AS THE EXCHANGES PROVIDE FOR GAURENTEE. IT IS RESPONSIBLE OF THE EXCHANGE AND THE MINISTRY OR THE AUTHORITY WHICH COMES HAS THE AUTHORITY TO MONITOR.MORE OVER THE GOVERNMENT WAS SLEEPING ALL THROUGH THIS YEARS WHEN A LEGAL EXCHANGE IS PROVIDING 45 DAYS CARRY FORWARD TRADE OPENLY THROUGH THE SYSTEM AND THE EXCHANGE SAYS IT HAS THE PERMISSION FOR THE SAME. THE MINISTRY SHOULD HAVE ALLOWED 4 MONTHS TIME TO THE EXCHANGE TO BRING THE ENTIRE CARRY FORWARD POSITIONS TO ZERO (WITH NO FRESH POSITIONS TO BE CREATED)INSTEAD OF ABRUPTLY STOPPING THE TRADING CYCLE AND CREATING THE PANIC.