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Home / News / Business News / SEBI appoints panel to resolve NSEL fiasco
  • Business

    SEBI appoints panel to resolve NSEL fiasco

    Written by
    Achin Garg
    Edited by
    Gaurav Jeyaraman
    Last updated on Oct 17, 2016, 04:27 pm
    SEBI appoints panel to resolve NSEL fiasco
  • The Security and Exchange Bureau of India has appointed a three member panel to deliver a verdict on the probe into the 2013 NSEL scam.

    An inside source said the investigations had concluded and was "referred to the adjudication department for inquiry and penal proceedings under section 11(B) of SEBI Act."

    The action against NSEl could include a monetary penalty or suspension of license.

  • In this article
    What is NSEL? The NSEL scam NSEL fraud surfaces Merger: A way to solve matters Enforcement Directorate opposes merger Government invites comments on merger Govt orders merger of NSEL and FTIL FTIL opposes move even as others welcome it SEBI appoints panel to resolve NSEL fiasco
  • About

    What is NSEL?

    What is NSEL?
    Credits:
  • National Spot Exchange Limited (NSEL), established in 2005, is the largest spot exchange in India.

    Headquartered in Mumbai, the exchange is a marketplace that allows buying and selling of commodities such as sugar, rice, steel, copper etc.

    NSEL is 99.99% owned by FTIL which is controlled by entrepreneur Jignesh Shah.

    It got mired in a Rs.5,600 crore commodity scam that surfaced in Jul'13.

  • Jul 2013

    The NSEL scam

    The NSEL scam
  • NSEL allowed traders to settle a trade between 11-36 days which enabled traders to re-trade without taking delivery of the commodity.

    However, in other spot exchanges, delivery of commodity for every contract is necessary.

    Due to this sort of 'futures trading' at NSEL based on the warehouse receipts for commodities that did not exist in warehouses, NSEL failed to settle its obligations to investors.

  • Personal

    NSEL fraud surfaces

  • The NSEL defaulted a payment of around Rs.5,600 crore which impacted 13,000 investors. As a result of the fraud, trading was stopped on NSEL in Jul'13.

  • Oct 2014

    Merger: A way to solve matters

    Merger: A way to solve matters
  • The government resorted to the merger of NSEL with its parent entity FTIL in "public interest".

    The merger was recommended by the market regulator Forward Markets Commission, and was backed by investors.

    The merger, to be undertaken under section 396 of the Companies Act, 1956, would make FTIL responsible for all liabilities of the NSEL, which currently stands at Rs.5,269 crore.

  • 20 Jan 2015

    Enforcement Directorate opposes merger

    Enforcement Directorate opposes merger
    Credits:
  • The economic offenses investigating agency, the Enforcement Directorate (ED), had opposed the merger of NSEL and FTIL.

    The ED said the merger might obstruct the investigation and prosecution of those accused in the Rs.5,600 crore fraud.

    While some saw it as a move by the revenue department to help Jignesh Shah, the government has completely refuted the charges.

  • Oct 2015

    Government invites comments on merger

    Government invites comments on merger
    Credits:
  • The government had invited comments from concerned entities in the NSEL-FTIL merger.

    However, the government had found that 96% of the comments were "orchestrated and concerted".

    It added that the language and style of emails were almost similar and the emails were sent in bulk from email addresses created by FTIL.

    FTIL had vehemently opposed the merger and termed it as "highly disappointing".

  • 14 Feb 2016

    Govt orders merger of NSEL and FTIL

    Govt orders merger of NSEL and FTIL
  • After months of waiting, the orders for merging the National Spot Exchange Limited (NSEL) and Financial Technologies India Ltd. (FTIL) was finally announced by the Ministry of Corporate Affairs.

    The government said that the merger was done in "public interest" so as to enable FTIL to subsume liabilities of the fraud-hit NSEL.

    FTIL, however, said that it would challenge the merger in the court.

  • 14 Feb 2016

    FTIL opposes move even as others welcome it

    FTIL opposes move even as others welcome it
    Credits:
  • FTIL opposed the "forced" merger and questioned the "public interest", as just 6% of the traders held "66% of the entire outstanding amount".

    However, NSEL investors have welcomed the decision, the liabilities of refunding the investors will fall on FTIL.

    Market experts have also supported the merger as NSEL was a wholly owned subsidiary of FTIL and responsibility should fall on FTIL.

  • 17 Oct 2016

    SEBI appoints panel to resolve NSEL fiasco

    SEBI appoints panel to resolve NSEL fiasco
  • The Security and Exchange Bureau of India has appointed a three member panel to deliver a verdict on the probe into the 2013 NSEL scam.

    An inside source said the investigations had concluded and was "referred to the adjudication department for inquiry and penal proceedings under section 11(B) of SEBI Act."

    The action against NSEl could include a monetary penalty or suspension of license.

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