Mumbai/New Delhi: The Central Bureau of Investigation (CBI) on Friday conducted searches at the Mumbai headquarters of Financial Technologies of India Ltd (FTIL), and the residences of Jignesh Shah (former chairman of FTIL), as well as those of former chairmen of the erstwhile Forward Markets Commission (FMC)—in connection with alleged irregularities in granting recognition to the Multi Commodity Exchange (MCX) as a national commodity exchange, said two people aware of the development.
In an emailed response, FTIL, now known as 63 Moons Technologies Ltd, said the search was in connection with the matter of permission granted to MCX in 2003, and added it has full faith in the judiciary. “We find this surprising as the permission was granted 15 years ago when the country did not have a pan-India commodity exchange. The permission to set up a nationwide commodity exchange was not only granted to MCX but also three others—NCDEX, NMCE and N-BOT," said a spokesperson for 63 Moons.
“We have already been forced to exit MCX in 2014 and all documents related to the permission are obviously with MCX. Despite this, the search is being conducted on us and our chairman emeritus (Jignesh Shah)," he said.
“During the search at Shah’s residence on Friday, CBI did not find any single incriminating material and/or document. The agency is being misled by vested interests trying to divert attention from the truth getting established," he added.
“CBI has initiated an inquiry into the clearance given by the Forward Markets Commission to MCX to become a nationwide exchange, even though MCX was not fulfilling stipulated criteria," said a CBI spokesperson.
The MCX spokesperson could not be reached for comment.
According to the second person mentioned earlier, a total of nine individuals and two firms—63 Moons and MCX—are under investigation. Apart from Shah, the other eight names include Joseph Massey, former deputy managing director of MCX, four former chairmen of FMC (one of them later joined Securities and Exchange Board of India), and three other FMC officials.
Calls made to Massey for a comment were not answered.
Mint is not naming the others as we could not reach out to them for a comment.
“Jignesh Shah and FTIL illegally retained shares beyond the permissible limit of 26%, thereby deriving wrongful gain of Rs137 crore by selling 26 lakh excess shares at Rs1,032 per share," said the second person quoted earlier.
This is the third CBI case against FTIL and Shah. CBI has registered a chargesheet against the two in the Rs5,574.35 crore National Spot Exchange Ltd (NSEL) scam for allegedly defrauding two public sector commodities trading firms—PEC Ltd and MMTC Ltd. CBI is also probing a case of alleged irregularities in according recognition to MCX-SX by capital markets regulator Securities and Exchange Board of India (Sebi) in 2008 and further renewing the recognition in 2009 and 2010.
MCX, promoted by Shah, was to launch an IPO in 2009-10, but postponed it owing to the global financial meltdown. It finally went public in 2012.