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Mumbai: On 31 July 2013, the National Spot Exchange Ltd, or NSEL, issued a late-night statement suspending all spot contracts. What seemed to be a mere case of following a government directive turned out to be a 5,574 crore payments scam that busted an exchange for the first time in India. It led to losses for 13,000 investors.

In the three years since, investigators have attached assets estimated to be worth around 8,000 crore, arrested alleged perpetrators, filed chargesheets in courts and are still on the money trail.

Out of the total dues, NSEL was able to distribute only 304.50 crore up to 10 September 2013. Of the total attached assets, 34.98 crore has been recovered but they haven’t been distributed to investors as a high court committee set up to examine investor claims is still in the process of verification.

Also see: How the NSEL crisis unfolded

Financial Technologies (India) Ltd, or FTIL, which owned a 99.99% stake in NSEL, has since moved out of the exchange business and is now focusing on technology for start-ups. The group’s founder, Jignesh Shah, has been arrested twice, while many of his trusted aides have shifted focus.

Mint takes a look at the key people in the NSEL drama and what they are doing now.

At the peak of his career, 49-year-old Jignesh Shah was called the king of commodity exchanges. He founded FTIL, a technology provider for market participants and exchanges such as Multi Commodity Exchange of India Ltd (MCX), MCX Stock Exchange Ltd (MCX-SX, now known as Metropolitan Stock Exchange) and NSEL, among others.

After the NSEL crisis, the Economic Offences Wing (EOW) of the Mumbai police filed a charge sheet against Shah alleging criminal conspiracy, fraud and forgery. The Enforcement Directorate (ED) is currently investigating him and is preparing to file a supplementary chargesheet.

In November 2014, Shah stepped down as managing director and CEO of FTIL and assumed the role of ‘chairman emeritus and mentor’. Arrested for a second time by the ED on 12 July on charges of money laundering and not cooperating with investigators, he is in judicial custody till 1 August.

“In India, either innovation is rewarded or destroyed... in my case, it was the latter," Shah told Mint hours before his arrest on 12 July. He said that his energies are focused in recovery of the 5,574 crore that the investors lost at the exchange.

Currently, his bungalow and flat in suburban Mumbai, another flat in Pune, 119,000 shares in FTIL (worth 178 crore at the time of attachment in December 2013), shares in Indian Energy Exchange (promoted by FTIL) and fixed deposits worth 11.57 crore have been provisionally attached.

“In the face of a forced exit, the innovator in Jignesh Shah continued to push for new ways to embrace technology—his vision gave birth to JS Innovation Labs. Jignesh Shah became the chief mentor of FTIL’s new avatar—63 Moons Technologies. However, he has completely disassociated himself of the day-to-day operations at 63 Moons," said an FTIL spokesperson in an emailed response.

A trusted aide of Jignesh Shah, Massey was managing director and chief executive officer of MCX-SX and a director at NSEL.

An FIR filed by the EOW on 30 September 2013 charged Massey with cheating, forgery and breach of trust, as well as criminal conspiracy. In October 2013, Sebi asked Massey (along with some others) to step down from the board of MCX-SX.

“Massey is currently on FTIL’s payroll but with no formal designation. In his current role, Massey is expected to aid in recovery of funds. He also aids the investigators in their probes by helping them understand the intricacies of commodities trading," said an FTIL employee on condition of anonymity.

Text messages and calls to Massey were not returned. However, an FTIL spokesperson in an emailed response said that “the backlash of these discriminating actions by the erstwhile Forward Markets Commission (declaring FTIL not fit and proper to run an exchange) was that Jignesh Shah, Joseph Massey and Shreekant Javalgekar were forced to exit their positions from their respective roles. All three were declared ‘not fit and proper’ in 2013, forcing FTIL to exit from its exchange businesses with a deadline of 90 days, despite the matter being sub judice".

FTIL did not explain Massey’s current role. People who have met him say that Massey is a devout Christian and his time is divided between the church and NSEL recovery. Massey’s two flats and MCX shares owned by him were provisionally attached by the EOW in December 2013.

The former managing director and CEO of MCX and non-executive director on the NSEL board, Javalgekar was also named as an accused in the NSEL scam. An FIR filed by the EOW alleged cheating, forgery and breach of trust, as well as criminal conspiracy. The agency had arrested him in May 2014 along with Shah.

He is still on FTIL’s payroll and, like Massey, has no official designation, according to FTIL employees who spoke on condition of anonymity. When the special money laundering court asked him to appear before it, he stated medical grounds and hospitalization for leave of absence on 13 July.

In a text message, Javalgekar did not go into details and said that he was a non-executive director at NSEL. He, too, didn’t respond on his current role. His four flats have been provisionally attached by the EOW.

Also see: What has changed in commodity market norms after NSEL

The former managing director and CEO of NSEL was the first to be blamed and arrested in the NSEL scam. Sinha was arrested in October 2013 after admitting that he and a few other officials at NSEL were responsible for the scam. His submission before the EOW gave a clean chit to the FTIL management, but things changed a month later when he retracted his statement and alleged that Shah forced him to transfer profits from NSEL to FTIL.

In May 2014, he was released on bail. Currently, he is providing consulting services to exchanges in Asia to help set up their operations in countries such as Myanmar and Bangladesh, according to three people familiar with the development.

He had even sought permission from the Bombay high court to travel to neighbouring nations in early 2016 in order to help a commodity exchange turn operational and permission was granted to him.

Sinha didn’t respond to text messages and calls.

His two apartments in Powai, shares of MCX, 16 lakh in his bank account, and 36 lakh in cash confiscated in a Central Bureau of Investigation raid (and deposited in the CBI’s bank account) are provisionally attached.

At the heart of the crisis lies the default by the 24 borrowing members who couldn’t settle their payout obligations. Investigations by the ED and the EOW have traced most of the money trail in the NSEL scam to these defaulters. Most of their land and property has been attached by the EOW.

So far, the EOW has secured property estimated at over 5,000 crore belonging to these defaulters. It has so far arrested 30 people and issued look-out notices for 65. The investigation is underway. Some of NSEL’s largest borrowers include Mohan India ( 878 crore), NK Proteins ( 934 crore), ARK Imports ( 719 crore) and PD Agroprocessors ( 674 crore).

A high-net-worth individual, Shah says he invested 15.7 crore in NSEL, about 40% of his wealth then. Soon after the scam, he formed the NSEL Investors’ Action Group. NSEL is one of the first cases where investors have come together and fought to recover their losses.

Interestingly, Shah has two criminal defamation cases filed against him, one filed in Mumbai and the other in Patna, on charges of hurting religious sentiments of a minority community through his tweets.

Shah claims otherwise. “These cases were to ensure that I am no longer actively pursuing FTIL through social media. Eventually, I deactivated my Twitter account; only this month I have come back on it".

Shah plans to wait for three to four months to see if the current legal and enforcement proceedings will lead to a refund to investors, after which he plans to approach the Supreme Court.

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