NSEL controversy: Jignesh Shah contests Sebi verdict on insider trading

Says 13 named and fined were not guilty; alleges conspiracy against him by Chidambaram

Jignesh Shah, founder and promoter of Financial Technologies India (FTIL), since renamed 63 Moons Technologies, has argued that the 13 individuals (including his father and brother) charged with insider trading violations in the repayment controversy concerning that entity’s subsidiary are not guilty. 

On Wednesday, the Securities and Exchange Board of India had passed an order against former FTIL and Multi Commodity Exchange (MCX) officials, saying they had traded with Unpublished Price-Sensitive Information (UPSI). The markets regulator has directed these individuals to pay a total of Rs 124 crore and impounded their bank and demat accounts till they do so. 

By Sebi’s order, USPI was the implication of the department of consumer affairs (DCA) notice dated April 27, 2012, to FTIL subsidiary National Spot Exchange (NSEL), which triggered a chain of events, subsequently leading to a Rs 5,600-crore payment crisis. 

Shah, in a second public appearance after the NSEL crisis that broke out in July 2013, said the DCA notice was not UPSI, as it was reported in the media. Citing various news reports, Shah asked, “If this is not published information, than what is?”

All the individuals charged by Sebi had followed all pre-and post-compliances required, he contended. All the transactions in question were valid and not based on USPI, he told reporters. 

Shah is still a major shareholder in FTIL but is no longer on its board of directors. He said he was speaking in the interest of the individuals, to whom he is a “mentor”.

Among the individuals asked to ‘disgorge the unlawful gain’, with an interest of 12 per cent per annum, are Paras Ajmera (disgorgement amount Rs 72 crore), Hariharan Vaidyalingam (Rs 46 crore), Manish Shah (Rs 2 crore) and   Shreekant Javalgekar (Rs 1.1 crore).  The 13 entities are relatives, close aides or senior officials of FTIL and MCX. NSEL was a fully-owned subsidiary of FTIL. MCX was also founded by FTIL.

Shah said if these individuals indeed would have traded on inside information, they would have sold their entire holding, not a small portion.

Venkat Chary, chairman of FTIL, said the Sebi order had impacted the lives and families of the individuals in question, as they are not able to access their bank accounts. This was a breach of the constitutional right to life. He said the FTIL board would decide if the company should defend these individuals before the Securities Appellate Tribunal (SAT), a quasi-judicial body where aggrieved parties can challenge Sebi orders. 

Shah also alleged the erstwhile commodities market regulator, the Forward Markets Commission was not interested in solving the crisis but focused on declaring the entity unfit to exist, to eliminate the group. 

He said there should be an enquiry against then Union finance minister P Chidambaram, additional secretary K P Krishnan and former FMC chairman Ramesh Abhishek.