NSEL scam: SFIO asks for delisting of 63 Moons Technologies from bourses

The SFIO also suggested that the I-T department probe 148 brokers

The Serious Fraud Investigation Office (SFIO) has suggested Financial Technologies India Ltd (FTIL), later renamed 63 Moons Technologies, be delisted from the bourses.

It has recommended this in a report to the Union minitry of corproate affairs on the scam in the erstwhile National Spot Exchange Ltd (NSEL), hit by a mssive payment default scam some years earlier. Also, that the company’s directors not be allowed to access the markets and raise funds. 

63 Moons said it could not comment, as it did had not seen the report.  

SFIO also recommended a probe by the income tax authorities into NSEL’s erstwhile brokers, 148 in number. “In some cases, the brokers were found to be involved in unauthorised funding by clients by obtaining funds from their NBFC (non-bank finance corporation) subsidiaries. The member-client agreement between the traders and the brokers entitled the traders to claim money from the broker for the trades done by them through the respective broker on the NSEL exchange platform. However, none of the brokers provided such compensation or money to the clients,” goes the SFIO report.  

Another allegation against the brokers is they made mis-representations, suiting the “greed” of clients by offering funding to the extent of 80-90 per cent, without being concerned with the income capacity.

Meanwhile, the board of directors of the Securities and Exchange Board of India approved action against 147 broking entities which traded on the erstwhile NSEL. These brokers have been accused of mis-selling the products to their clients.

The Rs 56-billion scam at NSEL, which came to light in July 2013, involved a little over a dozen commodity firms borrowing money on the platform after depositing commodities as collateral. Later, the borrowers defaulted when asked to settle their contracts. In many cases, the collateral was inadequate or simply missing. 

Later, NSEL was ordered to be merged with FTIL by the government. And, subsequently renamed 63 Moons Technologies.