NSEL crisis came into light in 2013. On one side where there are defaulters who
are responsible for money laundering, brokerage firms are equally responsible. In
this case Economic Offenses Wing of Mumbai police arrested three brokers of the
top brokerage firms involved. This was the first time that brokers were arrested
making it significant that brokers are the culprits.
CP Krishnan Dir. of Geofincomtrade, Amit Rathi Dir. of AnandRathiCommodities
and ChintanModi Dir. of India Infolinecommodities were taken for questioning.
Jt. Commissioner of police, EOW Mumbai Rajvardhan Sinha mentioned that
investigating officers observed their doubtful, non-cooperative behavior. It was
clear that these brokers were not giving out correct information and their
statements were contradicting according to the sources. Hence their arrests were
obvious under multiple sections of IPC which included bluffing, falsification,
criminal conspiracies and misdeeds. They were presented in Maharashtra
Protection of Investors Depositors court and through investigation is going on
along with other 139 broking houses who traded on NSEL platform.
As AnandRathi commodities had 12900 clients giving them access to 19132 Cr.
which accounting for 16 percent of NSEL’s revenue on the other hand India
Infoline Commodities had 9183 Cr. at the time their operations were suspended by
exchange. GeofinComtrade had 1000 clients and they recorded 5527 Cr. turnover.
It was assumed that these broking houses delivered fake assurance to their
investors and enticed them to invest in exchange by dishonest statements.
EOW of police revealed that brokers performed fictitious transactions. As it was
found that they manipulated the Unique client code information given to them &
the modifications were done only at brokers side. Mr.Sinha clarified some name of
investors having certain commodities in NSEL records as the broking houses were
different. In few cases, client account was used to perform trade for the sum of
1061 Cr. without clients consent. Brokers also falsely indulged in short selling and
circular trading to artificially increase volumes on exchange. Investigating agency
also questions proprietary trading by brokers.
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