The rise and fall of Jignesh Shah

Jignesh Shah, the founder of Financial Technologies India (FTIL), who has been battling with several government arms in the past few years, has now been arrested by the Enforcement Directorate (ED) under the Prevention of Money Laundering Act for non-cooperation in the investigation. 

This follows a fresh complaint by Member of Parliament Kirit Somaiya and reportedly a presentation made by the NSEL Investors Forum to the ED. This is the second time Jignesh Shah has been arrested. 

ED sources have said that the agency has found clear evidence of money laundering. 

Shah may have revolutionised the way India trades in commodity derivatives but the default in the National Spot Exchange (NSEL) brought him down. When trading was suspended on the NSEL in July 2013, 24 borrowers owed Rs 5,600 crore to investors, which hasn't been repaid, and is under litigation. 

Shah had a meteoric rise when he set up the Multi-Commodity Exchange, which did much better than rival National Commodity and Derivatives Exchange (NCDEX). Since 2009, he has been fighting with authorities, regulators and government agencies to prove that he wants to innovate in financial markets and that some vested interests were creating hurdles. His undoing happened in the NSEL case where he was arrested by the Economic Offence Wing of the Mumbai Police in May 2014 in the NSEL scam case and was released on bail in August 2014.  

Government agencies and regulators are probing NSEL related cases, which are many now, and a month ago, the finance ministry in its review meeting decided that a representative of the ministry of corporate affairs would visit Mumbai and ensure that the NSEL related cases are handled expeditiously. The ED’s action yesterday may be a follow-up to that decision, say sources. The action may not be an end but perhaps “a new beginning of actions by the government agencies in matters relating to NSEL”, said an official privy to the development. 

Investors of NSEL are also awaiting auction of properties of borrowers attached by Economic Offense Wing of Mumbai police, by the competent authorities.

63 moons technologies, the renamed Financial Technologies India, has been defending its chairman emeritus Jignesh Shah and will continue to do so but a challenging time has again begun for the company and its shareholders. The share price of the company was trading around 6 per cent lower at Rs.85.95 with huge volumes on BSE while Shah is being presented at the PMLA court today.