Sebi steers clear of fresh probe in NSEL scam

The Securities and Exchange Board of India (Sebi) has decided to steer clear of any fresh investigation and inspections with regards to the National Spot Exchange (NSEL) scam, sources have said.  

In a meeting with the Economic Affairs Secretary and senior ministry officials, Sebi gave a detailed reply informing them of the approach it is likely to adopt in the multiple investigations currently underway against the spot exchange. 

As per officials who were present at the meeting, Sebi has said that it would not initiate any investigation or conduct inspections of the brokers against whom there is allegation of mis-selling and client code modification in the NSEL scam. 

This approach by Sebi assumes importance as the merger of Sebi and Forward Markets Commission (FMC) on the 28th of last month was a direct fallout of the NSEL scam. 

NSEL investors and the market was hoping that merger with a superior regulator will help address complaints and lead to action. 

FMC due to lack of powers to inspect and investigate brokers had sought reports from investigative agencies such as the central bureau of investigation (CBI) and economic offences wing (EOW). So, far FMC had been unable to procure these reports. The market watchdog has decided to adopt a similar approach that instead of conducting its own probe, it would seek reports from the ‎CBI and EOW. 

The Rs 5,600 crore settlement crisis that started in 2013 resulted in 13,000 investors struggling to get their dues. 

The department of economic affairs in a letter dated 21st of September had asked Sebi to address the NSEL investors' grievances. Sebi’s reply falls in a slightly grey area as it wants to examine the profile of the investors. 

"Small investors have already received their dues. Now only HNIs are awaiting the refund of money," said a source present in the meeting.

In the matter of the Bombay High Court directions to examine Financial Technologies Ltd (FTIL) for alleged violations of insider trading ‎rules, Sebi has informed ministry that it is examining FTIL for not just insider trading but also fraudulent trade practices.