Stepping up its investigation into the NSEL case, the Mumbai Police Economic Offenses Wing served summons to directors of nearly 100 commodity brokerage firms, including some big names, who allegedly engaged in irregularities large-scale and on suspicion of tampering with their customer transactions, officials said on Friday.
These notices, asking the directors of those brokerage firms whose unpaid debts are estimated at over Rs 4,200 crore in the case, have been ongoing since the start of the year and continued until this month. ci, officials added.
They were asked to personally file in front of the EOW with information on the details of the change in transactions of all their clients, broker and client ledger accounts, client settlement account details, contact details banking, brokerage fees earned, PAN and KYC clients, warehouse visits and a host of other functional details.
The brokers denied any wrongdoing on their part and instead blamed the NSEL payments crisis on the exchange and its former promoters.
EOW’s long-standing investigation covers “NSEL, its directors, FTIL (now 63 Moons Technologies), directors, borrowers, brokers and others for committing multiple acts of counterfeiting and criminal breach of trust in connection with of a criminal plot hatched by them “.
The signatories of the convocation include the directors of Motilal Oswal Commodities Brokers Pvt Ltd, Anand Rathi Commodities, Systematix Commodities, Way2Wealth Commodities, India Infoline Commodities and Progressive Comtrade, among others.
According to details available from EOW, the five brokerage firms with the maximum amount of claims include Anand Rathi Commodities, India Infoline Commodities, Geojit Comtrade, Systematix Commodities and Motilal Oswal Commodities Brokers.
Other significant amounts receivable include Philip Commodities India, Emkay Comtrade, JM Financial Comtrade, Ventura Commodities, Arihant Futures & Commodities, SPFL Commodities, RR Commodity Brokers, Nirmal Bank Commodities, India Nivesh Commodities and Suresh Rathi Commodities.
Together, the 100 brokerage firms have Rs 4,205 crore in claims against them, the officials added.
In 2019, capital markets regulator Sebi issued orders against some of these brokers in the NSEL case, stating that they were “not fit and appropriate” to continue as a commodities broker. These orders followed a report by the EOW and complaints filed by the NSEL against the brokers.
However, these brokers later said the orders would have no impact on their business as they could continue to work under the business licenses received by their parent companies.
The brokers also challenged Sebi’s orders before the Securities Appellate Tribunal (SAT), which was also approached by the NSEL who called themselves an affected party and alleged that the regulator failed to consider all of the allegations. and all the elements of his complaint against the brokers.
However, the court refused to admit NSEL’s plea, prompting the exchange to seek intervention from the Supreme Court, under which the SAT was asked to allow NSEL to present its case.
As the NSEL crisis came to light in 2013, brokers continued to evade punitive action until the EOW’s forensic report in 2015 mentioned their alleged involvement in various irregularities and suspected infringement with their business customers.
Many brokers have been accused of misleading their business clients, channeling their money through Benami accounts and engaging in various other wrongdoing, including under the pretext of lending for securities in violation of securities laws.