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The Securities and Exchange Board of India plans to issue show cause notices to top five broking firms named in the ₹5,600-crore settlement scam at the National Spot Exchange.
Earlier, SEBI has ordered a third-party audit into the books of Motilal Oswal, AnandRathi, IIFL, Geofin Comtrade and PhillipCapital named in the NSEL case. As preliminary investigation points to manipulation by brokers to woo investors into NSEL, a show cause notice will be issued soon, said SEBI sources.
Payment crisisThe exchange has claimed that the brokers had packaged the NSEL products and sold it to investors assuring fixed returns without ensuring delivery.
The NSEL payment crisis started after the then commodities market regulator Forward Markets Commission ordered it to stop trading abruptly in July 2013. FMC suspected that the exchange is flouting norms by launching a series of contracts allowing investors to roll over their positions.
SEBI started handling the NSEL case last year after FMC was merged with it. Besides SEBI, the case is being investigated by multiple agencies, including the Economic Offences Wing of Mumbai Police, Enforcement Directorate, CBI and Ministry of Corporate Affairs.
Interestingly, the top 12 defaulters have agreed to a liability of ₹2,094 crore against the original receivables of ₹2,765 crore claimed by the exchange as on July, 2013. Of the total receivables of ₹5,690 crore, the exchange has managed to recover just ₹381 crore, so far.
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