Progress In NSE Scam Investigation

NSEL Spot Exchange Scam
  • Months after the National Spot Exchange (NSE) fraud that duped investors of nearly Rs.5600 crore was first reported, Jignesh Shah, its alleged mastermind who was hitherto untouched and not even subjected to interrogation, has been arrested by the Economic Offences Wing of the Mumbai police.
  • After FIRs were lodged against directors and key functionaries of the NSEL alleging cheating, forgery, criminal breach of trust, and criminal conspiracy to turn NSEL into a non-financial institution, several top officials were arrested and later released on bail, but the mastermind was scot free.
  • Despite knowing the identities of brokers and borrowers who defaulted payments and caused a financial crisis, they haven’t been taken into custody and interrogated.
  • The proposed plan and schedule to return the money has not been stuck to. Forward Market Commissions (FMC) must be held responsible since this happened under its watch.
  • Charges against NSE:
    • NSE, which was supposed to deal only in spot trades, was also allowing forward contracts.
    • Forged warehouse receipts were being used for the contracts that had no underlying assets or commodities.
    • The exchange was turned into a platform for short-term financing where buyers of contracts were the financiers and the sellers were the borrowers and this activity went on unregulated.
  • In addition to punishing the perpetuators gravely, sincere efforts must be directed towards retracing of the lost hard-earned money of innocent investors.
  • Read at:

Exams Perspective:

  1. Forward Market Commissions (FMC)
  2. National Spot Exchange (NSE)
  3. Spot Exchange Scam