Jignesh Shah remanded to CBI custody till Sept 26

During the hearing, the CBI counsel said Shah had misrepresented facts for getting licence for MCX-SX in 2004

A Central Bureau of Investigation (CBI) special court on Wednesday remanded Jignesh Shah, founder of Financial Technologies India Ltd (FTIL), to CBI custody till September 26.

Shah was arrested in a case registered against four Securities and Exchange Board of India (Sebi) officials for connivance with MCX-SX to fraudulently allow renewal of its licence to conduct trades in currency derivatives in 2009-2010. The arrest followed CBI’s extensive searches at nine locations in Mumbai, including Shah’s residence and FTIL headquarters on Tuesday. Besides, a CBI team also searched the residences of Sebi officials including former executive director J N Gupta, assistant general manager Vishakha More, former whole-time member K M Abraham, among others.

During the hearing in court on Wednesday, the CBI counsel said Shah had misrepresented facts for getting licence for MCX-SX in 2004.

The investigating agency has pointed out the possibility of receiving illegal gratification by Sebi officials from Shah and the companies. CBI in its remand copy said: “During searches in the residential premises of Sebi officials including More and Gupta, it was found that they have amassed huge assets which are suspected to be disproportionate to their own source of income. There is every possibility of their receiving illegal gratification from Shah and the companies.”

It further said that the MCX-SX’s application dated April 7, 2010  seeking permission to operate in other segments was rejected by Sebi, but Sebi officials failed to take action for withdrawal of recognition of MCX-SX from operating in currency derivatives. “It is suspected that he (Shah) was hand-in-glove with Sebi officials to secure renewal of recognition of stock exchange to deal in currency derivatives,” said CBI in the remand copy.

CBI said that in 2009, while issuing buyback warrants, promoters of FTIL and Multi Commodity Exchange were trying to control economic interest in MCX-SX. He also alleged that Shah had suppressed material facts of buyback arrangements via warrant to Sebi.