Top Broker in NSEL proved guilty - Geojit Comtrade

National Spot Exchange Ltd. came into discussion on a larger basis when NSEL crisis surfaced in 2013. The matter came under scanner of multiple agencies since then. Exchange was forced to shut down and suspend all its trading contracts. When the NSEL and its parent company FTIL was getting targeted, in actuality it was a well planned strategy of defaulters and brokers. It was stated that many investors claimed that the brokerage firms used their money & account details fraudulently.

Reportedly Udaipur-based NSEL investor Achal Agarwal invested his money through a well-known broker Geojit Comtrade. Mr. Achal filed a complaint against his broker and has suspected that his broker has swindled money under his name. Mr. Agarwal also learned about the unsought-disbursement of loan against Geofin Comtrade and Geojit Credits’ Ltd. These brokers together dishonestly used Mr. Achal’s account and PAN details to invest their huge amounts on NSEL platform.

Mr. Agarwal told Business Line that the outstanding receivable amount mentioned on his name was shocking. The outstanding receivable amount mentioned in NSEL was Rs. 4 Crore whereas the actual amount was only 9.75 lakh. Achal also stated that he has not taken any loan from anywhere for investing on the NSEL platform. He has also not received any such amount in any of his personal account. However, the actual trading amount of Achal Agarwal on NSEL platform through GeojitComtrade was Rs. 9.75 lakh.

The Bombay High Court gave instructions to the High Court Committee to seek KYC (know your customer) details from NSEL investors. Bombay High Court also asked NSEL and investigative agencies to be acquainted with the actual truth from the broker.

Mr. Achal has filed a complaint to the High Court Committee (HCC) on 4th July 2015. He has probed to investigate in this matter and consider this money laundering a serious manner. The forgery is done by Geofin Comtrade and Geojit Credits Ltd; a company owned by C P Krishna.  

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.