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Spotlight on the Brokers : NSEL 

Several aspects of the case, which broke out way back in 2013 at the National Spot Exchange Ltd (NSEL), are being probed by multiple regulators and agencies, including Sebi (Securities and Exchange Board of India), as also a high-level committee constituted by the Bombay High Court.

As a multi-agency analysis continues in the Rs 5,600 crore NSEL payment fiasco, investigators have come across fresh evidence suggesting routing of black money by sister concerns and associates of various brokers who had traded on the platform of the spot exchange.

In an short-term order, the committee has also favoured further investigation into source of funds of the brokers and various investors, many of whom are suspected to have been sister concerns or associated of the same brokers. Sources said the committee as also other regulators and investigative agencies have found major discrepancies in the data and details submitted by various investors as part of their claims, as against the data submitted by NSEL.These differences include submission of wrong PANs (Permanent Account Numbers), raising doubt about source of funds, while authorization letters and trade execution documents submitted by brokers have also been questioned.A senior monitoring official said the NSEL case is very exclusive as such because brokers themselves seem to be the real investors.

Sources said that there are also complaints against some brokers that they created forged record accounts in the name of their clients without their information. Nearly Rs 5,600-crore payment crisis at NSEL -- part of Jignesh Shah-led FTIL group -- came to light in late 2013 and since then, multiple agencies have been probing the matter.

The controllers, probe agencies and the High Court Committee are soon expected to conduct detailed audit of the account books, bank accounts and income tax returns of various investors, as also of relevant documents, including account books of the brokers, as also that of NSEL, in connection with at least eight brokers and their trading clients. Complaints against brokers include false declarations, inducement and misrepresentation by brokers, trading without appropriate authority from clients, misuse or unauthorized modification of unique client code, funding by NBFCs related to the broker and non-receipt of payouts by clients.

"It has also been supposed that funds of sister concerns of brokers, which could have been derived from illegal sources, were used to trade on the NSEL platform with an determined to legitimise the said funds, which amounts to money laundering," a senior official said.