Mumbai: Police searched at least 52 locations across India, including the Mumbai homes of Jignesh Shah, chairman and managing director of Financial Technologies (India) Ltd (FTIL), and Joseph Massey, chief executive officer and managing director of MCX Stock Exchange Ltd (MCX-SX), on Monday in connection with the payments crisis at National Spot Exchange Ltd (NSEL), an official at the economic offences wing (EOW) of the Mumbai Police said. The dragnet of the simultaneous search also took in the FTIL’s Mumbai offices, the official said.
Police also raided the residence of NSEL’s former MD and CEO Anjani Sinha. NSEL is promoted by Jignesh Shah-led FTIL.
The EOW had earlier filed a preliminary enquiry case against NSEL, Shah and others in connection with the Rs.5,600 crore settlement crisis at the spot exchange. This preliminary enquiry has now been converted into a first information report (FIR) that names all the directors of NSEL, including Shah and Massey. Additionally, the FIR includes the names of the 24 members who owe money to about 13,000 NSEL investors.
“This should have happened much earlier. We hope that the borrowers should co-operate in the investigation,” said Arun Dalmia, one of the aggrieved investors, who invested more than Rs.5 crore in NSEL.
“NSEL and Financial Technologies Group will fully co-operate with the government authorities in these investigations and is open to any scrutiny to bring the actual culprits to book,” an NSEL statement said.
According to a senior government official, who spoke on condition of anonymity, the current FIR against NSEL and its promoters has automatically triggered a case under the Prevention of Money Laundering Act (PMLA).
Under PMLA, the Enforcement Directorate (ED)—which deals with foreign exchange violations—can probe the spot exchanges along with other related parties mentioned in the FIR for alleged money laundering and for siphoning off funds abroad.
The PMLA allows law enforcement authorities to seize properties involved in money laundering.
“The actions of EOW are expected to yield results and the investor interest, which is of paramount importance in this matter, will be taken care of,” said Deven Choksey, managing director and CEO of KR Choksey Shares and Securities Pvt. Ltd.
Meanwhile, outraged shareholders of Multi Commodity Exchange of India Ltd (MCX), at the company’s annual general meeting in Mumbai, on Monday wanted to know what its management has been doing to compensate for the heavy losses incurred by the shareholders due to the drastic fall in MCX’s stock price over the past few months.
FTIL held 26% in MCX as at June end.
In the past three months, shares of MCX have tumbled from Rs.785.50 to Rs.382.05 apiece on BSE. On Monday, the stock lost 5%.
R.M. Premkumar, interim chairman of MCX, said, “The share price fall has drawn our attention.” But Shreekant Javalgekar, managing director and CEO of MCX, clarified that the company cannot be held responsible for the fall in the share price.
FTIL's founder Jignesh Shah, who is non-executive vice-chairman of the commodity bourse, did not attend the meeting.
The company said the introduction of a commodities transaction tax and the consequent fall in trade volumes have also contributed to the fall in share price.
The directors of the exchange also ruled out the possibility of a buy-back of shares to arrest the fall in the stock, adding that the situation could partly be stabilized if the Forward Contracts (Regulations) Act is amended by Parliament.
An FTIL spokesperson said Joseph Massey has quit all FTIL group firms, except MCX-SX.
The MCX directors maintained at the annual general meeting that the commodity exchange does not have any connection with NSEL.