ED notices to 5 brokers in connection with NSEL scam
This follows the forensic audit report on brokers by the economic offences wing of the city police
 "ED notices to 5 brokers in connection with NSEL scam")
The enforcement directorate (ED) has sent notices to five big brokers to file their books of accounts in the Rs 5,600-crore NSEL scam.
This follows the forensic audit report on brokers by the economic offences wing of the city police. It had said the brokers were involved in benami trading.
Last week, the ED had arrested Gagan Suri, chief executive, Yathuri Associates, one of the borrowers in the scam. The arrest was made under the Prevention of Money Laundering Act for diverting Rs 360 crore. Associates has Rs 425-crore dues.
The EOW had last week found evidence of irregularities on the part of the brokers.
The interim report showed evidence of hawala transactions, benami trades and and illegal code changes. The report added brokers were aware of the concerns at NSEL, as evidenced by them scaling back trades before the scam came to light.
NSEL has been caught in a payment crisis since August. Allegedly, the exchange had been used as a platform to raise capital from thousands of lenders. Subsequently, the borrowers defaulted.
There have been allegations of laundering and routing of capital to real estate and other businesses.
The report mentions hawala transactions of Rs 20-30 crore.
This follows the forensic audit report on brokers by the economic offences wing of the city police. It had said the brokers were involved in benami trading.
Last week, the ED had arrested Gagan Suri, chief executive, Yathuri Associates, one of the borrowers in the scam. The arrest was made under the Prevention of Money Laundering Act for diverting Rs 360 crore. Associates has Rs 425-crore dues.
The EOW had last week found evidence of irregularities on the part of the brokers.
The interim report showed evidence of hawala transactions, benami trades and and illegal code changes. The report added brokers were aware of the concerns at NSEL, as evidenced by them scaling back trades before the scam came to light.
NSEL has been caught in a payment crisis since August. Allegedly, the exchange had been used as a platform to raise capital from thousands of lenders. Subsequently, the borrowers defaulted.
There have been allegations of laundering and routing of capital to real estate and other businesses.
The report mentions hawala transactions of Rs 20-30 crore.
The interim report also states some of the directors were aware of the impending danger at NSEL; the EOW found volumes of the spot exchange saw a sudden fall in April and May 2013.
The report mentions evidence of illegal and unauthorised changes at the back end of NSEL servers. The names of clients on the servers were different from those in the brokers'.
Other irregularities were though clients had paid the money, they weren't offered memberships, nor did they get their money back. Also, brokers offered varying rates to clients, in violation of rules.
About 200 brokers, including several big names, are said to be implicated in the scam.
Though a number of brokers have been called for questioning, the police has not arrested any broker so far.
The source quoted earlier said the EOW would summon the brokers for interrogation again and a report on all the brokers involvement is expected in the next 45 days.
Among those arrested are exchange officials and three borrowers.
EOW is going to summon auditors as well next week to see their involvement in the scam.