NSEL Scam: Bombay HC panel charges brokers with mis-selling of products

Trade sources do not deny involvement of black money into system

With the High Court Committee (HCC) appointed by the Bombay High Court recommending audit of books of leading brokers in the Rs 5,600-crore National Spot Exchange Ltd (NSEL) scam, suspicions are being raised over brokers’ role in commodity trading at the now-defunct spot commodity trading exchange. Trade sources do not deny the involvement of black money into the system.

The HCC appointed by the Bombay High Court had last week named eight brokers and seven individual traders on NSEL to audit their books over discrepancies found in the trade data collected from three different sources — that is NSEL, brokers and clients.

Read more from our special coverage on "NSEL SCAM"

• NSEL scam: Suspicion mounts on brokers routing black money

This is the second time that brokers face allegations of mis-selling and offering false assurance of attractive returns on investments.

Two years ago, a couple of executives of leading brokerage firms were arrested and later released on bail.

“HCC has raised a very important aspect of the entire NSEL scam, which needs to explored,” said an industry expert.

The HCC found brokerages guilty of submitting false data including the permanent account numbers of clients and trading on their behalf without their knowledge.

Also, in some cases, traded goods in brokerages’ books were found unmatched with that of clients and NSEL.

Afrom the Securities and Exchange Board of India, the Enforcement Directorate, the economic offences wing of the Mumbai Police are also investigating the case.

Since the scam broke out at NSEL around three years ago, brokers have faced little investigation so far despite playing a lead role in trading.

The source further said that while money trail has been discovered with defaulters, exploring source of funds at brokers end would be interesting to know.