Home / Market / Stock-market-news /  NSEL case: Investor moves court against Motilal Oswal, PhillipCapital

Mumbai: An investor affected by the fraud at the National Spot Exchange Ltd (NSEL) has moved the Maharashtra Protection of Interests of Depositors (MPID) court requesting it to direct the economic offences wing (EOW) of the Mumbai Police to file a fresh first information report (FIR) against two brokerages allegedly involved in the NSEL fraud.

The two brokers are Motilal Oswal Financial Services Ltd. and PhillipCapital (India) Pvt. Ltd. This is the first formal complaint in the court against the role played by brokers in the NSEL case.

The plea, filed by investor Ketan Shah, in the MPID court under section 156 (3) of the code of criminal procedure has alleged that the two brokerages along and its top officials “induced" him to put around 16 crore in NSEL trades before the payment crisis. Shah has also alleged that the brokerages made false representations, committing criminal breach of trust.

“Motilal Oswal and PhillipCapital were hand in hand with NSEL and FTIL (Financial Technologies (India) Ltd) and had a common intention to cheat and defraud me into investing my hard earned money for their personal enrichment. They have wrongfully gained from their blatant acts of cheating me. Therefore, it is just and necessary that my complaint needs to be thoroughly investigated by the police," said the plea filed by Shah. Mint has reviewed a copy of the plea.

“At the outset we wish to inform that we have not received any notice from the MPID Court. If, and when, we receive the notice from the court, we shall be taking appropriate action under the provisions of law," said Ajay Menon, director and chief operating officer of Motilal Oswal Securities Ltd, a part of Motilal Oswal Financial Services.

According to Menon, Shah had a portfolio of more than 15 crore with Motilal Oswal across different products. In the last few days of July 2013, since the brokerage house had not allowed Ketan Shah to renew his contracts despite his insistence, he had received about 7 crore of payout, Menon said.

“We also understand that, in spite of our warning, he had invested this money back into the NSEL product through some other broker because of his belief in the product," Menon said in an e-mail response.

A PhillipCapital official declined to comment as he was yet to receive a copy of the plea filed by Shah.

FTIL, owns 99.99% in NSEL, on which trading was suspended after a 5,574.35 crore payment crisis came to light in July 2013. Nearly 13,000 investors are believed to have lost money due to the fraud at NSEL. While NSEL has managed to refund investors in its e-series contracts and a small fraction of the regular investors, roughly 5,334.31 crore of investor money remains stuck and the process of refunding investors has been excruciatingly slow.

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