Rogue brokers carried out Money Laundering in NSEL case

Brokers have been in light in the NSEL case for their act of mis-selling. SEBI is investigating the work of brokers in NSEL crisis. There was 60 Days of time given to the brokerage firms to have their books of accounts vetted, by the Investigating agencies. In addition to that it is said that SEBI has came across fresh evidence against the top five brokerage firms involved in NSEL case. The evidence states that there is high possibility of brokers involved in using the ‘Exchange Mechanism’ for money laundering. SEBI had appointed a third party auditor, who has submitted an audit report and that report are reviewed by regulator. As a result ‘show cause’ notices would be sent to the brokers according to the evidence found.     

There are number of audit findings which require through explanations. Some of the disturbing audit findings which are evidence against brokers are given below:-

• According to the audit, it comes to knowledge that upto five brokers had sold products NSEL goods by giving out false promises of getting returns upto 16%
•  It was also found that some of the brokers had facilitated loans to investors through their non-banking financial companies despite being aware that there were no such goods with the borrowers/defaulters.
• Further facts state that the transactions that took place were very complicated in nature, and all the entities involved were used to trading on the NSEL platform with the intent to legitimize the funds.
• The audit report also include instances of mishandling or unofficial modification of unique client code. There were several instances of discrepancies and manipulation of books of accounts.

 The audit report clearly fulfilled that many spiteful activities including manipulation, mis-selling & deceit have been carried out by the brokers which possibly lead NSEL to the gigantic Rs. 5600 crore crisis. In the bargain of these fraudulent activities carried on by some spiteful brokers many entities connected to NSEL have been greatly affected. These malicious activities by brokers need to be verified further and strict action needs to be taken against these rouge brokers.