Brokers had a big hand in NSEL scam: EOW

Brokers played a major role in the Rs5,600-crore National Spot Exchange Limited (NSEL) scam, the economic offences wing (EOW) of the Mumbai crime branch has found.

According to the EOW, brokers provided wrong information to investors about the availability of warehouses and stock. "As per the statement given by investors, the brokers had assured them that they have personally verified the availability of goods in the NSEL warehouses... But when we started investigating we found that the brokers had provided wrong information to investors," and EOW officer said.

Brokers gave investors bogus warehouse receipts issued by NSEL, assuring them that the goods had been delivered, verified and valued at a certified warehouse.

Brokers acted as clearing and forwarding agents as well. One of the investors told the EOW that a broker had assured him after the scam was unearthed that there was enough stock in the warehouse and there was no need to panic. "The brokers connived with the borrowers and manipulated the ledger account maintained by them for clients," the officer said.

Rajvardhan Sinha, additional commissioner (EOW), said: "We are in the process of collecting evidence... As far as brokers are concerned, action will be taken at the right time."