NSEL scam: Suspicion mounts on brokers routing black money

Bombay HC committee has favoured further investigation into source of funds of brokers and various investors

As a multi-agency probe continues in the Rs 5,600 crore NSEL payment fiasco, investigators have come across fresh evidence suggesting routing of black money by sister concerns and associates of various brokers who had traded on the platform of the spot exchange.

Various aspects of the case, which broke out way back in 2013 at the National Spot Exchange Ltd (NSEL), are being probed by multiple regulators and agencies, including Sebi (Securities and Exchange Board of India), as also a high-level committee constituted by the Bombay High Court.

In an interim order, the committee has also favoured further investigation into source of funds of the brokers and various investors, many of whom are suspected to have been sister concerns or associated of the same brokers.

Sources said the committee as also other regulators and investigative agencies have found major discrepancies in the data and details submitted by various investors as part of their claims, as against the data submitted by NSEL.

These discrepancies include submission of wrong PANs (Permanent Account Numbers), raising doubt about source of funds, while authorisation letters and trade execution documents submitted by brokers have also been questioned.

A senior regulatory official said the NSEL case is very unique as such because brokers themselves appear to be the real investors.

There are also complaints against some brokers that they created fake ledger accounts in the name of their clients without their knowledge, sources said.

The regulators, probe agencies and the High Court Committee are soon expected to conduct detailed audit of the account books, bank accounts and income tax returns of various investors, as also of relevant documents, including account books of the brokers, as also that of NSEL, in connection with at least eight brokers and their trading clients.

Complaints against brokers include false assurances, inducement and misrepresentation by brokers, trading without appropriate authority from clients, misuse or unauthorised modification of unique client code, funding by NBFCs related to the broker and non-receipt of payouts by clients.

"It has also been alleged that funds of sister concerns of brokers, which could have been derived from illegal sources, were used to trade on the NSEL platform with an intent to legitimise the said funds, which amounts to money laundering," a senior official said.

The nearly Rs 5,600-crore payment crisis at NSEL -- part of Jignesh Shah-led FTIL group -- came to light in late 2013 and since then, multiple agencies have been probing the matter.