Moneycontrol
Last Updated : Jan 10, 2017 06:38 PM IST | Source: Moneycontrol.com

EXCLUSIVE: SFIO serves notices to brokers in NSEL scam

The Serious fraud Investigation office (SFIO) has shot off notices to all broking firms whose clients traded in commodity pair contracts on the National Spot Exchange. The brokers have been asked to furnish their books of accounts, a source told Moneycontrol.

Tarun Sharma
Moneycontrol

The Serious Fraud Investigation office (SFIO) has shot off notices to all broking firms whose clients traded in commodity pair contracts on the National Spot Exchange. The brokers have been asked to furnish their books of accounts, a source told Moneycontrol.

Brokers to whom notices have been sent include Motilal Oswal Commodities, Anand Rathi Commodities, India Infoline Commodities, Geofin Commodities, and Systematix Commodities.

It may be recalled that many investors lost money when borrowers on the NSEL defaulted on their obligations. Later, it emerged that in a majority of the cases, there was no collateral in the warehouses.

While brokerages were not directly responsible for the default by the borrowers, their (brokers’) role is being investigated for possible collusion with officials at NSEL.

Most brokerages pushing the NSEL product had sold the pair contracts as an ‘assured return’ scheme to their clients. It was a lucrative business for the brokers as they earned brokerage on the trade as well as interest payment for providing funds to clients who wanted to invest in the product.

SFIO has asked NSEL to furnish details of settlement guarantee fund disbursement soon after the fraud was discovered.

“We are probing the books of NSEL and getting details who exited just before the scam broke out,” the source said.

SFIO has issued notices as well to the NSEL former top management, which included Financial Technologies founder Jignesh Shah, Anjani Sinha, Sreekant Javalgekar and Joseph Massey.

“..certain information has been asked by the authorities (SFIO) from our company as well. Whenever any information is requested by the department concerned, we are providing the same,” an Anand Rathi spokesperson said in an e-mail response to a query from moneycontrol.

An India Infoline spokesperson said in an e-mail that “India Infoline Commodities Ltd has not received any notice from SFIO regarding NSEL matter.”
First Published on Jan 10, 2017 11:57 am
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