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After interrogating borrowers of the crisis-ridden National Spot Exchange Ltd (NSEL) and attaching properties valued at about Rs 4,300 crore, the economic offenses wing (EOW) of the Mumbai police has threatened to freeze the properties of the exchange’s brokers.
“Brokers’ assets can also be frozen in this case, if required,” said a senior EOW official, adding while interrogating brokers, the Securities and Exchange Board of India would be informed if required, as many brokers were regulated by the capital market regulator.
If EOW freezes the assets of the brokers, their day-to-day business may be affected.
The move may also have implications on settlements on exchanges.
Through the last few days, NSEL brokers have been interrogated by the police on complaints they were mis-selling the exchange’s products. It was also alleged in some cases, they had promised assured returns to investors.
An EOW official said Anand Rathi Commodities and Best Deal Commodities had been summoned on Wednesday. Anand Rathi Director Jugal Mantri and Arpit Mehta, part of NSEL’s business development team, were interrogated on Wednesday. Ventura Capital and IIFL have also been summoned for the interrogation. Others to have been summoned are Motilal Oswal, Nirmal Bang Commodities and Geojit Comtrade.
EOW officials say currently, they are looking into the involvement of brokers in the case and are studying their personal and client accounts. EOW has decided to summon 200-odd brokers of the exchange.
The police said these brokers were first carrying out deals on their account and later, parting ways with investors to earn huge margins.
The initial part of the investigation is based on the information the police has obtained from NSEL servers. Meanwhile, the criminal investigation wing of the Mumbai income tax department, has sent several notices to brokers, after studying the details provided by the brokers to the director general of investigation, income tax, a few months ago.
Earlier, the brokers were asked whether they had paid taxes on the money invested in NSEL products. Now, the department has summoned many brokers for further investigation and asked them to provide the details of last three years' returns, contract-wise dealings, the details of profit and loss in such dealings, whether the deals were on their accounts or those of their clients and know-your-customer details.
In another development, Mohan India Group, one of largest NSEL borrowers, has approached the income tax department to ensure the Rs 59.53 crore seized from the company is deposited in the NSEL escrow account.
