Enforcement Directorate arrests Jignesh Shah in Rs.5600 crore NSEL scam

13 Jul 2016 | Written by Akriti Asthana; Edited by Gaurav
Jignesh Shah and the NSEL scam

Jignesh Shah, the founder of Financial Technologies (India) Limited, was arrested by the ED in connection with the National Spot Exchange Limited commodity exchange fraud case.

He was taken in on charges of non-cooperation during the investigation procedures.

According to the ED officials, he was arrested under the Prevention of Money Laundering Act (PMLA) in light of "fresh" developments in the case.

In context: Jignesh Shah and the NSEL scam

Prevention of Money Laundering Act, 2002

The Act came into force with effect on July 1, 2005. It provides for prevention of money laundering and confiscation of property attained from money laundering activities. It was amended in the years 2005, 2009 and 2012.

31 Jul 2013The National Spot Exchange Ltd. Scam

The NSEL scam came into light in July 2013 after two dozen borrowers failed to make pay-ins when the government asked NSEL to suspend spot trading.

The NSEL has been accused of collaborating with 25 companies on the forward trading market to trade fake stocks on the exchange on the basis of forged documents.

It resulted in huge losses to the 13,000 investors.

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The route taken by the Enforcement Directorate

13 Jul 2016The route taken by the Enforcement Directorate

Jignesh Shah was accused of the NSEL scam and arrested by the EOW of the Mumbai Police in May 2014 but was granted bail three months later.

The ED had prosecuted NSEL and 67 others in 2015,tracing a money trail amounting to Rs.3721.22 crore.

The Maharashtra government was directed to auction assets worth Rs.6,116 crore attached so far and refund investors at the earliest.

13 Jul 2016Progress in the case

The ED filed its first chargesheet regarding the scam in April 2015 which alleged a Rs.5574.35 crore scam, claiming it to be a criminal conspiracy.

However, the hearings have not been able to take place because of technical reasons.

Recently, some respite was offered to the 68 accused by a special court.

Shah will be produced before a PMLA court on 13 July.

13 Jul 2016Enforcement Directorate arrests Jignesh Shah in Rs.5600 crore NSEL scam

13 Jul 2016FTIL's response to the allegations

63 Moons Technologies Limited (formerly FTIL) responded by saying that they were unable to understand the reason behind why the ED took such a coercive step .

Shah had reportedly been compliant with the investigation procedures, even when the ED failed to register a money trail to either Shah or the company.

However, they said they would wait for the judgement.

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FTIL shares plunge after Shah's arrest

FTIL shares slumped nearly 10% after Shah was arrested by the ED. The stock further slumped 8.45% to Rs.83.40 on BSE and at NSE, shares of the company tumbled 9.63% to Rs.82.55.

19 Jul 2016Mumbai court rejects plea for extension of Jignesh Shah's custody

P R Bhavke, special judge for cases under the PMLA, has remanded Shah till 1st August.

The ED had recorded statements of several NSEL officials like CEO Prakash Chaturvedi, director Padmanabhan Ramnath,CEO of NBHC Anil Chaudhary and issued summons against Anjani Sinha.

According to ED, Shah's claims that "he became aware about the NSEL problems only after the exchange was closed" held no truth.

21 Sep 2016Jignesh Shah arrested for cheating, conspiring in MCX trading scam

Jignesh Shah, the controversial promoter behind MCX and Financial Technologies India Limited, has been arrested for cheating and conspiracy with regards to the MCX derivatives trading scam.

The CBI's economic offences wing raided Shah's Juhu residence, FTIL headquarters and MCX headquarters and gathered enough evidence to formally charge him.

The homes of individuals from SEBI were also raided during the case.