NSEL Scam: SEBI Cracks Down on Former Officials of MCX, FTIL

SEBI found former officials of MCX, FTIL “prima facie guilty of insider trading”.

The logo of the Securities and Exchange Board of India (SEBI), India’s market regulator, is seen on the facade of its head office building in Mumbai. 

(Photo: Reuters)

Cracking its whip, regulator SEBI on Wednesday impounded averted losses totalling Rs 125 crore through alleged insider trading in MCX and its erstwhile promoter FTIL by 13 persons, including relatives of Jignesh Shah and former top executives, with 'prior information' about the NSEL case.

The National Spot Exchange Ltd (NSEL), promoted by Financial Technologies India Ltd (FTIL), had to suspend trading on 31 July 2013 after a major payment crisis broke out at the bourse. Subsequently, a number of regulators and enforcement agencies launched their probes into the NSEL case.

In two separate orders passed on Wednesday, SEBI said its investigations into alleged insider trading in shares of Multi Commodity Exchange of India (MCX) and the erstwhile FTIL (which has now changed its name to 63 Moons Technologies Ltd) found that 13 persons “prima facie” traded in these stocks when in possession of ‘unpublished price sensitive information’.

Finding them “prima facie guilty of insider trading”, the regulator said these persons were able to avoid any potential loss in the shares of MCX and FTIL and it has become necessary to take steps for impounding and retaining the loss averted by them.

In a statement, 63 Moons Technologies said it would be studying the SEBI order and “take necessary action as it may deem fit”.

The SEBI order pertains to certain individuals and not to the company, it added.

Those named in the order relating to FTIL include former MCX CEO Shreekant Javalgekar and his wife Asha; Jignesh Shah’s brother Manish Shah and father Prakash Shah; FTIL employee and a former director at NSEL Hariharan Vaidyalingam; another FTIL employee V Arvindkumar Iyengar and his wife Dhanashri; and Bharat Kanaiyalal Sheth (brother of FTIL director Ravi Sheth).

Three of them – Javalgekar couple and Hariharan Vaidyalingam – also figure in the MCX order. Five others named in the MCX order include former MCX chief Joseph Massey; ex-director at MCX Paras Ajmera; former NSEL CEO Anjani Sinha; Tejal Shah (wife of Manjay Shah, Jignesh Shah's brother and FTIL director); and Mehmood Vaid, a senior vice president at FTIL.

Jignesh Shah had served as Chairman and Managing Director of FTIL at that time. However, no order has been passed against him directly.

As per the two orders passed by SEBI’s Whole Time Member S Raman, these 13 persons have been directed not to dispose of or alienate any of their assets/properties/securities, till such time the individual amount of loss averted is credited to an Escrow Account.

They have been directed to individually provide, within 7 days a full inventory of all their assets and properties and details of all their bank accounts, demat accounts and holdings of shares/securities and details of companies in which they hold substantial or controlling interest.

Sebi also directed banks that no debits shall be made, without its permission, in respect of the bank accounts of these persons, except for the purposes of transfer of funds to the Escrow Account.

(The article has been edited for length.)

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