The Central Bureau of Investigation (CBI) on Tuesday arrested Jignesh Shah, promoter of Financial Technologies India Ltd (FTIL) and commodity exchange MCX, and conducted searches at nine places in Mumbai in a case of alleged cheating and suppression of facts in getting Sebi extension to MCX-SX to continue as a private stock exchange in violation of norms.
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In 2014, the CBI had registered a case under the Prevention of Corruption Act to probe officials with markets regulator Sebi, which had in 2010 allegedly helped Shah-promoted companies FTIL and MCX-SX (now Metropolitan Stock Exchange) to fraudulently start a currency derivatives platform on the stock exchange.
Apart from Jignesh Shah, there were four officials of Securities and Exchange Board of India (Sebi) who were also arrested – two former Executive Directors of Sebi namely – JN Gupta and Muralidhar Rao.
The agency further alleged that SEBI officials deliberately did not issue notice to the stock exchange for cancellation of its recognition in the currency derivatives, when SEBI had already rejected request of the same stock exchange for trading in other segments. While two ex-Sebi officials were also involved namely – Vishakha More and Rajesh Dangeti.
Among the locations where raids were conducted included MSEI or the erstwhile MCX Stock Exchange and in property of three SEBI officials.
Incriminating documents, including share transfers by private companies, FDR, purchase of assets etc., which were recovered during the searches are being scrutinized for further investigation A case was registered against the promoter of the company Jignesh Shah. CBI chose to arrest Shah for custodial interrogation.
On July 12 this year, he was arrested by the Enforcement Directorate (ED) on charges of money laundering and for alleged not cooperating with their NSEL related investigations.
It was alleged that the accused company had dishonestly entered into a buyback arrangement with some financial institutions in violation of the Securities Contract Regulation Act, 1956, and other rules and regulations and deliberately suppressed this material fact while applying for the extension of its recognition to operate in currency derivatives.
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The arrest follows series of raids by the Economic Offences Wing (EOW) of the CBI and grilling of Shah at the Mumbai office of the agency, throughout the day.
