 "Sebi board discusses action taken in Rs 5,600-crore NSEL scam")
Multiple agencies including Sebi are probing the irregularities that happened at the now-defunct NSEL.
With regard to the case, Sebi chairman U K Sinha said: "The status of investigation of Sebi regarding the broking firms and whether they are fit and proper or not, was discussed and the board was apprised of the position".
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The board meeting, which is also the final one to be chaired by Sinha, held in New Delhi on Saturday, was also attended by chairman-designate Ajay Tyagi. Finance Minister Arun Jaitley addressed the board.
After the meet, the regulator said the board was apprised of the actions taken so far against some of the brokers on the basis of examination of an allegation received with respect to their role in the NSEL matter.
According to sources, Sebi has also forwarded relevant findings of its inspection of the rule of the five brokers to Mumbai Police's Economic Offence Wing, Department of Revenue, Department of Consumer Affairs, Directorate of Enforcement (ED) and the Reserve Bank of India (RBI) for necessary action at their end.
Sources said the markets regulator had also granted the concerned entities an opportunity of inspection of the relevant documents, after which they were asked to submit their replies to the Show Cause Notice issued by Sebi.
NSEL was incorporated as a company, with FTIL holding 99.98 per cent stake, with an objective of operating pan-India commodities spot exchange platform for which it obtained licenses under APMC Acts of various state governments to run spot exchange activities.
It was also granted exemption by the government from the preview of the erstwhile Forward Contracts Regulation Act (FCRA) to conduct trading of one-day duration forward contracts subject to various conditions.
The erstwhile Forward Markets Commission (FMC) was the statutory regulator under the FCRA and was functioning under the administrative control of the Consumer Affairs Ministry. Later this administrative control was transferred to the Finance Ministry in September 2013.
While NSEL was outside the domain of regulation of the erstwhile FMC, the government through notifications in February 2012 and August 2013 had assigned a specific role to FMC to discharge certain responsibilities vis-a-vis NSEL.
Before the merger of FMC with Sebi, the government also withdrew the exemption granted to NSEL from the FCRA provisions.
However, as on the date of FMC-Sebi merger, there was no notification in existence for observance by FMC with respect to NSEL and therefore Sebi did not have any role to discharge regarding NSEL, except for defending the interest of the erstwhile regulator and the central government in various litigations pertaining to the NSEL scam.