Mumbai: A special court on Wednesday allowed the Central Bureau of Investigation (CBI) to question Financial Technologies of India Ltd founder Jignesh Shah in its custody till 26 September.
Shah was arrested by CBI on Tuesday following an inquiry into charges that the promoters of MCX Stock Exchange (now known as Metropolitan Stock Exchange of India Ltd) had suppressed information on their shareholding while seeking recognition for the exchange. He was produced before a special court hearing CBI cases on Wednesday.
While seeking custody, CBI told the court that Shah had connived with officials of the Securities and Exchange Board of India (Sebi) to seek recognition for MCX-SX in 2008-09. “As Shah is the only person aware of all the facts, his custodial interrogation is needed,” CBI said.
MCX-SX, set up by FTIL, and its commodity exchange arm MCX, started operations in 2008 with trading in currency derivatives and became a full-fledged exchange in 2013 after a long battle with Sebi. The regulator had initially refused to grant a licence for equity trading, citing high promoter shareholding in MCX-SX. The promoters reduced their direct holding by issuing warrants to themselves—a mechanism Sebi frowned upon.
The CBI alleged that this mechanism was devised by Shah in collusion with Sebi officials. CBI had registered a preliminary inquiry in March 2014 in this issue and filed a first information report (FIR) five months later.
The FIR named Shah, FTIL and four Sebi officials who were involved in the licensing process.