Sebi says probing into FTIL, promoters

Bombay High Court asks Sebi to complete probe in 12 weeks; Will take necessary legal recourse, says FTIL

The Securities and Exchange Board of India (Sebi) has told the Bombay High Court that it was investigating complaints against Financial Technologies and its connected entities and promoters including founder Jignesh Shah. 

  

The complaints filed by investors of National Spot Exchange Limited (NSEL) alleged several irregularities and violations of Sebi Act and alleged breach of Regulations such as  (a) Insider Trading Regulations; (b) Fraudulent and Unfair Trade Practices  and (c) Failure of disclosure under the Takeover Code and other issues. 

In an order posted on its website, the Bombay High Court said, “the learned counsel for the Sebi submits that the Sebi has taken cognizance of the complaints filed by the Petitioners and they will investigate the same.” 

The petitioners had sought to direct the Sebi to hear and decide the complaints filed by the Petitioners on merits and in accordance with law and also within a time bound schedule. 

The bench of judges BP Colabawalla and VM Kanade said in the order, “Since this is the only relief claimed by the Petitioners, the writ petition can be conveniently disposed of by directing the SEBI to look into the complaints and, if necessary, to investigate the same and the said process to be completed within a time bound schedule and if possible, within a period of twelve weeks, on merits and in accordance with law.”

The complainants, Delhi-based Smita Bhartia and Mumbai-based Meenal Maheshwari who had lost over Rs 1.3 crore in the Rs 5,600 crore payment crisis that hit NSEL in July 2013, had held FTIL promoter Jignesh Shah, companies floated by him such as La-Fin finance Services and key management personnel of the group including Paras Ajmera, Dewang Neralla, Joseph Massey and Manjay Shah responsible for the debacle.  

The complaints alleged that Shah was aware of the affairs of NSEL and some of the above entities connected to him had sold the shares of FTIL and MCX ahead of the payment crisis between January 2013 and July 2013.

The duo had also complained about disclosure violations by a firm called Sigma Financial Services, associated with La-Fin and irregularities in the sale of FT group arm Bourse Africa.

Business Standard had reported about the Sigma case  and Bourse Africa sale  in December 2014. 

Disposing of the petition, bench clarified that “we have not expressed any opinion on merits and only direct the Sebi to decide the case on merits and in accordance with law.” 

The Sebi might consider the request made by the Petitioners for the supply of copy of the Kalyanwala and Mistry Report (K & M Report) to the Petitioners, the bench said.  

In response to an email seeking comments, an FTIL spokesperson said, “We would like to inform you that in the question you are referring to, FTIL has not been made a party and has not come across, on the High Court website, of any such order by the Honorable High Court. We reserve our right being the aggrieved party and will take necessary legal recourse.  On your query regarding the K&M report, we would like to clarify that while preparing the said report, FTIL was neither given a chance to reply/suggestions nor the final report was shared with us.”