Documents accessed by dna show that the then finance secretary stated in August that FMC should have taken action against brokers
The Union finance ministry had nudged Indian commodity regulator Forward Market Commission (FMC), merged with the stock market regulator Sebi in September, for taking against brokers of the scam-tainted National Spot Exchange Ltd (NSEL).
According to internal documents of FMC accessed by dna, the then finance secretary Rajiv Mehrishi in August had said that FMC should have taken action against NSEL brokers.
A top FMC official requesting anonymity told dna, "We are keen to take action but have not been provided any sufficient evidence by the investigative agencies as well as the exchange – NSEL. We could not take any step without sufficient evidence."
Documents reveal that FMC did evaluate legal options till May 2015 and feedbacks were taken from other commodity exchanges and NSEL, before taking action against five commodity traders- Anand Rathi commodity ltd, Geofin Commodities Ltd, India Infoline Commodities Ltd, Motilal Oswal and Philip Commodities.
FMC had discussed possible action and use of Section 12-B of Forward Contracts Regulation Act (FCRA). Section 12-B of FCRA empowers the FMC to suspend a member of recognised association or prohibit the member from trading in the interest of trade or the public.
On May 12, FMC director S K Mohanty gave a legal advice that it is not appropriate to invoke punitive measures till such time the Economic Offence Wing (EOW) files charge sheets.
On April 4, Mumbai EOW wrote to FMC about suspected activities of NSEL brokers. But FMC source said that EOW did not share an interim report with them. The content of EOW letter indicates — "Brokers were indirectly incentivised to generate high volumes, offering inducements, financing and deliberately making wrongful assertions to get brokerage and therefore facilitating NSEL in generating higher volumes". However, in March 2015, EOW Mumbai had arrested three officials of three prominent broker companies- Anand Rathi, Geofin and India Infoline.
Now, Sebi will handle the NSEL case and will investigate the scam.
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