NSEL scam: Sebi cracks down on ex-officials of MCX, FTIL

The Securities and Exchange Board of India (Sebi) on Wednesday, impounded ‘averted losses’ of about Rs 1250000000 through alleged insider trading in Multi Commodity Exchange of India (MCX) and its erstwhile promoter Financial Technologies India Limited (FTIL) by 13 persons, including relatives of Jignesh Shah and former top executives, with ‘prior information’ about the Rs 5,5000000000 National Spot Exchange Limited (NSEL) payment crisis case. NSEL promoted by FTIL, had to suspend trading on July 31, 2013, after a payment crisis broke out at the bourse. Subsequently, NSEL came under the scanner of multiple regulators and enforcement agencies. As a result, Sebi said certain top officials of the two firms 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. Sebi said the UPSI used by the individuals was the implication of show-cause notice of 27 April 2012 issued by department of consumer affairs to NSEL that warned of a possible suspension of trading at the spot exchange. The 13 individuals named by Sebi include — 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; Bharat Kanaiyalal Sheth (brother of FTIL director Ravi Sheth); 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. Sebi has directed these 13 persons to not 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. The capital markets watchdog has also directed them to individually provide 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 within seven days. Sebi has directed banks to not debit the accounts of the 13 named in its order without its permission, except for the purposes of transfer of funds to the escrow account. The regulator has also instructed the depositories to no debit the demat accounts of these persons without its permission. Sebi has also issued a show-cause notice to these 13 individuals and asked them to respond to the notice within 21 days.