With practically every investigating agency shifting focus towards brokers in the National Spot Exchange Ltd case, several broker associations have asked all those members who were registered on the exchange prior to the default in 2013 to contribute to a common pool, in order to contest the charges made against them by these agencies. The brokers’ defence line is that they have not received proceeds of the crime and efforts have to be made to recover money from defaulters who have borrowed from the NSEL. They further claim that the money trail has been clearly established.
Off late agencies such as Sebi, The Economic Offences Wing (EOW) of Mumbai police and the Serious Fraud Investigation Organisation (SFIO) have been targeting NSEL non-defaulting brokers, and the Mumbai High Court had even asked the police to look at attaching properties of these brokers.
Both, the BSE Brokers Forum and Association of National Exchanges, have asked the concerned brokers to deposit Rs 5 lakh in a pool account to continue legal fight against the court cases.
Uttam Bagri, Chairman, Bombay Stock Exchange Brokers Forum said, “(Non defaulting) Brokers never got the crime proceeds, nor had they worked in collusion with defaulters or NSEL. It is NSEL which has been held as the financial establishment under MPID Act and hence brokers' assets cannot be attached."
Sebi had issued show-cause notices to 300 brokers and filed police complaints against them, and Mumbai High Court asked EOW to look at attaching properties of all 632 NSEL brokers, which include 300 sebi-registered ones.
In the NSEL Rs 5,600 crore default case, which impacted 13,000 investors, the stocks missing from the warehouses controlled by the exchange are at the core of the issue. Bagri said, “Efforts need to directed at recovering money from the defaulters. The attached assets (of defaulters) need to be sold as soon as possible and the proceeds distributed to investors.”
While hearing the petition of 63 Moons, promoter of NSEL, Mumbai High Court had asked why brokers’ assets were not being attached. Brokers responded saying they were not party to that petition and hence they are moving court. Their hearing is on February 8.
NSEL also moved court and urged EOW to final charge sheets in the case as early as possible. This case will be heard on January 7. Eow had filed charge sheet against 63 entities last week.