Sebi issues fresh notices to 20 entities in NSEL scam

Markets regulator Sebi has issued fresh notices to at least 20 entities including brokers for allegedly indulging in irregular activities in the Rs 5,600 crore NSEL scam.

Final orders against these entities can be passed by the regulator anytime so, sources said.

Several entities on the list are allegedly linked to one particular broker, they added.

Multiple agencies including Sebi are probing the irregularities that happened at the now-defunct National Spot Exchange Ltd (NSEL).

The Securities and Exchange Board of India (Sebi) had earlier this month apprised its board about the actions taken so far against brokers on the basis of examination of allegation received about their role in the scam.

Sebi had earlier issued notices to five brokers and forwarded findings of its inspection of the role of these brokers to Mumbai Police's Economic Offence Wing, Department of Revenue, Department of Consumer Affairs, Directorate of Enforcement (ED) and the RBI for necessary action at their end, sources said.

The markets regulator, they said, had also granted the concerned entities an opportunity of inspection of the relevant documents, after which they were asked to submit their replies to the Show Cause Notice issued by Sebi.

NSEL was incorporated as a company with FTIL holding 99.98 per cent stake, for operating a commodities spot exchange platform. It had obtained licences under APMC Acts of various state governments to run spot exchange activities.

It was also granted exemption by the government from the preview of the erstwhile Forward Contracts Regulation Act (FCRA) to conduct trading of one-day duration forward contracts subject to various conditions.

The erstwhile Forward Markets Commission (FMC) was the statutory regulator under the FCRA and was functioning under administrative control of the Consumer Affairs Ministry. Later this administrative control was transferred to the Finance Ministry in September 2013.

While NSEL was outside the domain of regulation of the erstwhile FMC, the government through notifications in February 2012 and August 2013 had assigned specific role to FMC to discharge certain responsibilities vis-a-vis NSEL.

Before the merger of FMC with Sebi, the government also withdrew the exemption granted to NSEL from the FCRA provisions.

However, as on the date of FMC-Sebi merger, there was no notification in existence for observance by FMC with respect to NSEL and therefore Sebi did not have any role to discharge regarding NSEL, except for defending the interest of the erstwhile regulator and the central government in various litigations pertaining to the NSEL scam.