Split among NSEL investors

Separate group files complaints anew with EOW, ED and Sebi against brokers; don't take them seriously, aver original protestors

 

A split has developed among the aggrieved investors and brokers of the “now defunct” National Spot Exchange Ltd (NSEL), ailing arm of the Financial Technologies (FTIL) group, which faces a Rs 5,600-crore payment crisis.

A group of around 20 people claiming to be “true representatives” of NSEL investors have formed a separate body, the NSEL Investors’ Action Group (NIAG). It is headed by Ketan Shah, representative of two NSEL investors, Tarun Amarchand Jain HUF and Ashish Seth HUF, who claim to have lost crores of rupees. These are the same two investors who petitioned the high court here for immediate halt to settlement and delivery of e-series contracts and monetising of commodities stocks under it and evenly distributing these among all investors.

The NSEL Investors’ Forum (NIF) has claimed to have succeeded in its effort through separate complaints to the regulator, the Forward Markets Commission (FMC), to Economic Affairs Secretary Arvind Mayaram and through several protests at NSEL and FTIL offices.

“NIF has not represented investors’ concerns fully. In fact, we started protests against NSEL, which was hijacked by NIF. Now, we will be representing NSEL investors’ concerns thoroughly,” said NIAG founder- member Shah.

NIAG appears to have also registered a complaint to the economic offences wing (EOW) of the city police, the Securities and Exchange Board of India (Sebi) and the enforcement directorate (ED), seeking a forensic audit of all major brokers involved.

“Brokers are in full knowledge that the number of borrowers is just 18, around 0.15 per cent of the total number of investors of NSEL. Also, acting on behalf of investors, brokers did not collect delivery orders or warehouse receipts, the title of the goods. In a criminal breach of trust, the brokers gave away investors’ money without securing the investor in return by collecting negotiable documents,” said the complaint.

The complaint also noted the time difference between buy and sell orders at NSEL, which indicates bulk purchases and small quantity sales. EOW has an ongoing investigation against brokers, after completing inquiries with borrowers, NSEL and FTIL officials. It had recently said it would call five or six brokers for their role in the mis-selling of NSEL contracts.

Meanwhile, Arun Dalmia, secretary of NIF said NIAG was not a registered organisation and their issues should not be taken at face value. “A group of 15-20 people has formed an action group which, we came to know, has filed a police complaint. They are just trying to disrupt the progress made by various investigative agencies on NIF complaints,” he added. “The group earlier filed a writ petition in the high court. Because of that, the entire proceedings and justice has been held back. Even the NIF writ case has not come for hearing, while so many other cases filed after that have been heard in the court immediately after the writ petition.”

Taking credit for all action since the crisis erupted, including FMC declaring FTIL and its promoter, Jignesh Shah, along with his two trusted colleagues, Shreekant Javalgekar and Joseph Massey “not fit and proper” persons to run an exchange registered with FMC, Dalmia said, “Had NIF not taken full representation of investors, these actions would not have happened.”

Dalmia rejected any division among NSEL investors.