INSUBCONTINENT EXCLUSIVE:
Exchange (NSEL) scam, said two people familiar with the matter
function as a registered broker in the commodities market
The five broking firms include Anand Rathi Commodities, India Infoline Commodities, Geofin Comtrade, Motilal Oswal Commodities and Philip
Commodities.
The regulator is expected to issue an order soon.
The case dates back to 2012 when NSEL failed to repay 13,000 investors who
were trading on the platform
The exchange also did not have adequate goods in its warehouse to back trades
On April 4, 2015, the Economic Offences Wing asked Sebi to take appropriate action in the NSEL case
The erstwhile commodity market regulator Forwards Market Commission was merged with Sebi on Sept 28, 2015
The five brokers made an application to Sebi for registration as a commodity broker
Sebi had appointed J Singh Associates, a chartered accountant, to carry out an inspection of these brokers
Based on its findings, the regulator initiated inquiry proceedings against the brokers and appointed a bench to inquire
The bench recommended that the application of the brokers should not be considered in the interest of the securities market and the
applications should be rejected
Sebi issued a show cause notice to the five brokers in April
have jurisdiction over them
But, Sebi contended that since brokers had applied for registration in the commodities segment, the regulator had jurisdiction over them,
prompting them to withdraw the applications.
When Sebi rejected this argument, they went to the Bombay HC
The court dismissed the petition saying they were seeking to withdraw their applications only to escape the inquiry initiated against them
commodity derivative segment and equity segment, there is no automatic rule under securities laws that would apply a fit and proper
criterion in one segment into another
