 "NSEL crisis: 10 questions brokers want Jignesh Shah to answer")
They also threatened legal action against Jignesh Shah, head of Financial Technologies, which also is the promoter of NSEL. They also alleged that the exchange does not have adequate stock in the warehouses to meet obligations.
Reacting to the development, Financial Technologies and MCX tanked over 35% and 5% respectively to Rs 111 and 254 levels in trade on Wednesday.
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Representatives of brokers, including IIFL Chairman Nirmal Jain and Motilal Oswal Financial Services CMD Motilal Oswal, alleged at a press meet on Tuesday sought explanation on the whereabouts of the Rs 5,600 crore NSEL owed its brokers and investors.
In a press note, NSEL Investors Forum in association with Commodity Participants Associations of India (CPAI), Association of National Exchanges Members of India (ANMI) and BSE Brokers Forum (BBF) sought explanations from NSEL, Jignesh Shah, Forward Market Commission (FMC) and the Government on the following ten questions:
1) Why NSEL and Mr Jignesh Shah have been so slow in making public details of the progress of payments and checking of stocks?
2) Why are authorities not making public the money trail, that is, in which accounts investors’ money, to the tune of Rs 5500 crore, was transferred and from those accounts, where has money gone?
3) Clear explanation to be made public on how trade guarantee fund of Rs 800 crore dwindled to Rs 65 crore and is now currently only Rs 5 crore. The margin money belonged to which borrowers and where has it been appropriated?
4) Why all information is not made transparently available on website with regards to collections in the Escrow account and status of all payments by borrowers.
5) NSEL had stated publically on August 4, 2013 that 2,181 crore borrowers have been paying on time. And also they stated that balance will be paid in 20 weekly instalments of 5% each. By now, therefore, Rs 800 crore should have been collected. What is the status of these collections and explanations for delays?
6) Have authorities summoned the 24 borrowers and confirmed their liabilities? In case they have not appeared before FMC and the Government, have they used their executive powers to get them to explain their position? What is the action plan of FMC and the Government to bring these to books?
7) NSEL, MCX and FT have common promoters and directors. NSEL, FT and Mr Jignesh Shah have been evading and dodging clear explanations and we understand that even FMC has not received any information from them. For instance, no explanation has come on media reports about missing stocks and shell companies being borrowers. If this is true, then there is no transparency and there is a lack of adequate and timely information flow from NSEL and FT. Why should regulator and the Government not ring fence assets of FT and the promoter, Mr Jignesh Shah and family to meet shortfall of the investors funds?
8) On July 10, 2013, Mr. Jignesh Shah himself made presentation to FMC Chairman, FMC officials and Secretary, Mr. Pankaj Agarwala that there is foolproof risk management and NSEL is extremely safe. How can he now put blame on professional management?
9) Is Mr. Jignesh Shah and his management team still ‘Fit & Proper’ to run commodity, currency and stock exchanges and risk several thousand crores of public and institutions’ money? Why should MCX license not to be suspended and also why should these promoters be allowed to run international exchanges and risk India’s reputation as well?
10) Why should existing management not be superseded and replaced by a respectable Board led by somebody like Mr. Deepak Parekh?