Flags Anand Rathi, Geofin Comtrade’s role in NSEL scam
The Securities and Exchange Board of India (SEBI) has rejected the application of registration for commodity broking licence from Anand Rathi Commodities and Geofin Comtrade for their alleged role in the ₹5,600-crore settlement scam at the National Spot Exchange Ltd. (NSEL) that came out in the open in July 2013.
According to the capital markets regulator, the entities are not ‘fit and proper’ to function in the commodity segment for their alleged role in facilitating so-called paired contracts for their clients on NSEL, which was forced to suspend trading in all contracts in August 2013 due to the absence of the underlying commodities to settle the contracts.
The regulator also directed the two entities to allow all existing clients to move to other brokerages within 45 days. Incidentally, the latest set of orders comes close on the heels of the watchdog taking a similar stance against the applications for a commodity broking licence by Motilal Oswal Commodities Broker and India Infoline Commodities.
Collusion with exchange
As per the SEBI probe, large brokerages colluded with the spot exchange for marketing of paired contracts, wherein clients were assured fixed returns ranging between 13% and 16% per annum.
While nearly six years has passed since the NSEL scam came to light, the matter has been in the news recently with 63 Moons Technologies, formerly known as Financial Technologies India Ltd. (FTIL), initiating the process to file suits for damages, claiming ₹10,000 crore against former finance minister P. Chidambaram and senior bureaucrats K.P. Krishnan and Ramesh Abhishek for alleged abuse of their powers and mala fide actions against the company.
63 Moons is the parent entity of NSEL and was the subject of probes by various regulatory and investigative agencies.
In a statement to the stock exchanges, Geojit Financial Services clarified that Geofin Comtrade neither is nor was its subsidiary or associate or group company. On the BSE, shares of Geojit Financial Services declined 2.49% to close at ₹35.30.