NSEL scam: Brokers decline responsibility for default

Investors' fora press for quick action against FTIL, support govt's merger and supersession proposals

In response to the settlement offer made in the National Spot Exchange (NSEL) payments default case by its parent entity, Financial Technologies (India) Ltd, wherein brokers are supposed to contribute Rs 500 crore to the investors, three broker associations jointly said they declined to go along.

Alok Churiwala, vice-chairman & spokesperson, BSE Brokers Forum, said: “On behalf of Association of National Stock Exchange Members, BSE Brokers Forum and Commodity Participants Association of India,  we  emphatically state there has never been any discussion on any settlement nor any proposal given by the broker forums of Rs 500 crore or otherwise. It is preposterous to assume so when the defaulting members and NSEL are the sole and principal beneficiaries of the scam. The question of brokers entering into any settlement discussion does not arise.”

Representative bodies of investors of the now-defunct NSEL asked the government on Friday to take quick action against the FTIL board and to merge NSEL with the parent. The government had proposed this merger and has petitioned the Company Law Board to supersede the FTIL board. The case is to be heard at CLB on April 17.

The appeal was made by NSEL Investors Forum, NSEL Investors’ Action Group and NSEL Investors Justice Group. They made a joint appeal to the ministry of corporate affairs to hasten on the matter. The proposed merger, they declared, was in the public interest and the FTIL board should be superseded to counter the “bogus claims” of FTIL-NSEL.

“The NSEL scam has affected 13,000 families, including widows, pensioners, senior citizens, war veterans, etc, who were promised fixed returns by brokers/NSEL with complete knowledge of the promoter, FTIL,” they declared.

Adding: “The exchange (NSEL) which took the counter-party risk on itself defaulted on its solemn guarantee. FTIL cannot keep on hiding behind a corporate veil after committing a fraud. It is a settled position under common law that any fraud or crime is against public interest. Therefore, ordering the amalgamation and thereby mitigating/curing the fraud would be in the public interest. Beside, the merger will save about Rs 400 crore of public sector money and about Rs 1,650 crore as income tax setoffs for the government exchequer. In the past 19 months, NSEL investors have received only a measly six per cent and practically nothing in the past one year.”