The Investors Grievance Forum (IGF) has filed a complaint with the Economic Offences Wing of the Mumbai police against NSEL (National Spot Exchange Limited) alleging “cheating, fraud and forgery” affecting “ about 17,000 small farmers and investors”.
The forum’s president and BJP leader Kirit Somaiya has urged the police to file an FIR against the promoters of NSEL - Financial Technologies - officials of NSEL, commodity futures market regulator FMC, officials in the ministry of consumer affairs and brokers and warehouse keepers, who have allegedly issued false documents and information.
The FIR, Kirit Somaiya stated in his complaint, should be filed under the Indian Penal Code and the Maharashtra Protection of Interest of Depositors Act.
Somaiya told that the complaint was lodged following requests for help from several small investors who had suffered losses after trading was suspended on NSEL.
The exchange has to ensure repayment of over Rs. 5,000 crore to several investors by more than a score of borrowers / or members of NSEL, who borrowed the funds against stocks in exchange-accredited warehouses.
The exchange suspended trading on NSEL last month following a notice to it by the government asking it to stop the launch of T+2/T+25 contracts, which exceeded the tenure of spot contracts of 11 days. Thousands of investors who lent to the over 20 borrowers through these contracts face the risk of losing their funds in the event of a default, fears Somaiya.
Market sources said NSEL and its promoter Financial Technologies are seeking legal opinion of leading law firm J Sagar Associates, which acted as domestic counsel to FT Group company MCX during its IPO.
Ms. Somaiya blamed the ministry of consumer affairs, which he claimed had been negligent in permitting NSEL to trade despite being aware for almost a year and a half that it had “violated” norms relating to short sale by brokers of the exchange and those ensuring delivery of outstanding positions at the end of the day.
However, more than a year ago, the ministry, following findings by the regulator Forward Markets Commission (FMC), had sent a show-cause notice to the spot exchange for allowing its platform to be used for contracts which, the authorities felt, were not permitted in a spot exchange.
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