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Business News/ Market / Stock-market-news/  FTIL, MCX shares tumble on Jignesh Shah’s arrest
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FTIL, MCX shares tumble on Jignesh Shah’s arrest

FTIL shares fall by the daily 5% limit, while MCX shares close 6.99% lower, after dropping as much as 9.6%

Jignesh Shah, 47, was arrested in Mumbai for custodial interrogation in order for authorities to learn more about the payment default. Photo: Abhijit Bhatlekar/MintPremium
Jignesh Shah, 47, was arrested in Mumbai for custodial interrogation in order for authorities to learn more about the payment default. Photo: Abhijit Bhatlekar/Mint

Mumbai:Financial Technologies (India) Ltd (FTIL) slumped by the daily limit in Mumbai after chairman Jignesh Shah was arrested by the police as part of their investigation into the biggest payment default in the National Spot Exchange Ltd (NSEL).

FTIL shares fell by the daily 5% limit to 276.70, the lowest close since 13 February. Multi Commodity Exchange of India Ltd (MCX), in which FTIL own 26% stake, retreated as much as 9.6% to 481.75, before closing 6.99% lower at 496.35.

Shah, 47, was arrested in Mumbai for custodial interrogation in order for authorities to learn more about the payment default, Mumbai police additional commissioner Raj Vardhan Sinha said on Wednesday in a televised media briefing. Shreekant Javalgekar, the former chief executive of MCX, was also arrested, he said.

NSEL, which Shah founded, was ordered by the Indian government in July to halt trading, and it is the subject of the probe. NSEL failed to settle about 5,600 crore in dues to investors, according to the Forward Markets Commission (FMC), the commodity market regulator.

“The arrest was long overdue," Arun Dalmia, secretary of NSEL Investors Forum, said by phone on Wednesday. “Now, the process of recovering the money will definitely speed up. The group was formed by investors who lost money when the exchange defaulted."

The now-defunct NSEL broke rules by permitting the sale of goods traders didn’t keep in its warehouses, according to regulators. The turmoil began with the government seeking details on NSEL’s settlement cycle on 14 July, and deepened with the suspension of most contracts on the NSEL on 31 July.

Assets seized

FMC in December declared Shah and former MCX managing directors Joseph Massey and Javalgekar as ineligible to hold any post in the bourse. While MCX held no stake in NSEL, it was controlled by FTIL, which also owns exchanges in Bahrain, Botswana and Dubai.

Police probing the payment crisis at NSEL seized properties and shares worth $487 million from exchange officials and defaulters in December, which may be used to clear dues to investors. The investors so far have only received back about 5% of the 5,600 crore, said Dalmia of the NSEL Investors Forum.

FTIL informed the stock exchange of Shah’s arrest in a filing on Wednesday. Ramesh Abhishek, chairman of FMC, didn’t answer two calls to his mobile phone. Bloomberg

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Published: 08 May 2014, 11:48 AM IST
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