K M Abraham, former Securities and Exchange Board of India member, who in 2011, opposed the then finance minister Pranab Mukherjee for being asked to go easy on some corporates, would now be investigated by Central Bureau of Investigation for alleged irregularities in granting sanction to MCX's equity bourse.
As Sebi member, he had investigated the Sahara case and passed the order against the company.
The CBI has registered Preliminary Enquiry on Thursday against former Sebi Chairman C B Bhave, ex-member K M Abraham and Jignesh Shah, the founder of Financial Technologies India Ltd and MCX, among others.
The PE was registered on issues of alleged irregularities in granting sanction to the MCX Stock Exchange (MCX-SX) by the Sebi in 2008 and renewing the recognition in 2009 and 2010. According to CBI, the probe is to ascertain how MCX-SX was granted permission despite opposition by Sebi when Bhave was head of the regulatory authority.
Bhave became Sebi Chairman in February 2008 and his three-year term ended in February 2011. Abraham's term as a whole-time member of Sebi also ended in 2011. Bhave was appointed a trustee of the IFRS Foundation, responsible for the governance and oversight of the International Accounting Standards Board (IASB), in 2012.
Abraham, in 2011 itself, had written to Prime Minister's Office that Sebi was being pressurised by the finance ministry to go easy on some corporates, including MCX and Sahara, against whom he had passed orders.
However, these charges were rejected by the finance ministry and Sebi as well.
MCX-SX was set up by Shah-led FTIL and its commodity exchange arm is MCX. It started functioning as a full-fledged stock exchange in 2013.
An FTIL spokesperson told reporters that they would provide "full cooperation to the investigating agencies".
MCX-SX was initially granted permission for a limited segment of currency derivatives in 2008, on the condition its licence would require approval every year.
In 2013, Sebi asked MCX-SX to restructure its board and governance structure after a payment crisis at the National Spot Exchange Ltd (NSEL), also promoted by FTIL.
CBI has also registered a case a case against the National Spot Exchange Ltd (NSEL) and its promoters under the Prevention of Corruption Act, alleging criminal conspiracy by it to cheat a public sector company, PEC Ltd.
The case has been registered against chief general manager and general manager of PEC and managing director and CEO and director of NSEL.
According to CBI, the accused persons between 2007 to 2013 were party to a criminal conspiracy to cheat PEC Ltd in the matter of floating accommodative and fraudulent paired contracts for trading of agri-commodities without actually undertaking any genuine trade.
"Certain officials of PEC Ltd abused their official position as public servants and allegedly invested in purchase of agri-commodities of PEC Ltd on the platform of Mumbai-based company without ensuring any physical delivery of the commodities and without obtaining documents of title. An alleged loss of Rs 120.75 crore was caused to PEC Ltd," said a senior CBI official.