NSEL Traders suspected of routing black money

A classic plot-twist has unfolded as agencies probing the NSEL case have tightened the grip around defaulters. Investigators have realised that NSEL brokers indulged in routing of black money by their sister concerns as well as associates. 

The case which came to light in 2013 is being seen as an example of multiple agencies uniting to provide justice – SEBI (Securities and Exchange Board of India) and a high-level committee set up by the Bombay High Court are investigating from their respective fronts.

The committee has summoned a new investigation direction to track the source of funds of the brokers and traders; and suspicions are strong that they were sister concerns or associates of the very same brokers.

It was already revealed that glaring discrepancies have been found in the data and details submitted by the traders. Submission of wrong PANs (Permanent Account Number) has raised suspicions about the source of funds. Besides, authorisation letters and trade execution documents submitted by brokers are also questionable.

A senior regulatory official has aptly described the case as very unique because here – brokers themselves appear to be the real investors. Brokers nearly committed every fiscal crime in the rulebook when they created fake ledger accounts in the name of their clients, that too without client knowledge or permission.

At least eight brokers and their trading clients are under the scanner of regulators, probe agencies and the High Court Committee, who will extensively audit the account books, bank accounts and income tax returns of traders. Account books of the brokers and those of NSEL will also be audited.

That’s not all; complaints against the brokers extend as far as giving false assurances, trading without permission from clients, misuse of client code 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.

More than two years have passed without proper action against the perpetrators and instead inferior alternatives have been suggested like – merging of NSEL with its parent company FTIL founded byJignesh Shah, a suggestion that goes entirely against the concept of limited liability.

But now with SEBI and the High Court committee fully dedicated to dig out the truth, there’s finally hope for the 63k FTIL shareholders who are being made to pay for someone else’s sins.