Sebi not in favour of fresh probe into NSEL scam

Informs ministry that like FMC it will rely on CBI, EOW

Less than a week after the merger into itself of the Forward Markets Commission (FMC), the Securities and Exchange Board of India (Sebi) has told the Union finance ministry it will not do any new investigation into the National Spot Exchange (NSEL) scam, sources say.

At a recent meeting with the economic affairs secretary and senior ministry officials, Sebi gave details of the approach it is likely to adopt in the multiple investigations underway against the exchange. NSEL’s brokers face allegations of mis-selling and client code modification.

Sebi’s absorption of FMC was a fallout of the NSEL scam. Its stand could dash NSEL investors’ hope that the merger would give a renewed push for a probe. FMC, due to lack of authority to inspect and investigate brokers, had sought reports from the Central Bureau of Investigation (CBI) and the Mumbai Police’s economic offences wing (EOW). It had been unable to procure these reports. Sebi has decided on a similar approach, that instead of conducting its own probe, it would seek reports from ·CBI and EOW.

The Rs 5,600 crore settlement crisis that started in 2013 has resulted in 13,000 investors struggling to get their dues. The department of economic affairs had in a letter dated September 21 asked Sebi to address the investors’ grievances.

Sebi has said it wishes to first examine the investors’ profile.

“Small investors have already received their dues. Certain wealthy investors, however, are awaiting refund,” said a source present in the meeting of its stand.

On the directions of the high court here to examine NSEL’s promoter entity, Financial Technologies Ltd (FTIL), for alleged violation of insider trading rules, Sebi has informed the ministry that it is examining FTIL, not only for insider trading but also fraudulent trade practices.

Sebi’s legal department would now deal with the scam cases at the HC. It would also coordinate with the ministry of corporate affairs on the latter’s proposal for merging NSEL with FTIL.