National Spot Exchange

National Spot Exchange Ltd.
Private
Industry Commodity Spot Trading
Founded 2005
Headquarters Mumbai, India
Key people

Mr. Prakash Chaturvedi (Chief Executive Officer)[1]

Mr. Neeraj Sharma (Sr. Vice President)

Mr. Sandip Rahane (Manager)
Products Spot exchange
Website www.nationalspotexchange.com

National Spot Exchange (NSEL) is a Commodities exchange in India, and was touted as a joint venture of Jignesh Shah owned Financial Technologies (India) Ltd. (FTIL) and National Agricultural Cooperative Marketing Federation of India (NAFED). National Spot Exchange commenced its live trading operations in different commodities on Wednesday, 15 October 2008. It began trading in pre-certified cotton bales for Mumbai delivery and imported gold and silver bars for Ahmedabad delivery immediately, and has since added a number of commodities. NAFED was given 100 shares and was called a 'promoter' to induce investors and give them a false sense of safety.On 31 July 2013 the crisis on the exchange broke when it neither had money nor stocks to pay to investors.

National Spot Exchange's stated mission was to develop a common Indian market by setting up a nationwide electronic spot market and providing state of art trading, delivery, and settlement facilities in various commodities. This exchange is now in the middle of a crisis due to a major 5600 crore (then US$0.9 Billion) commodity scam and all the trades have been stopped.

Facilities Offered

The National Spot Exchange, promoted by FTIL and JIgnesh Shah, is now defunct. [2]

But the 13000 NSEL victims are still alive, while the perpetuators of the Rs 9200 Cr NSEL fraud, are very much enjoying life with their ill gotten wealth, and using the same to ensure that justice not only gets delayed, but also denied. An exchange going default is a major blot on the Indian Economy, and a black mark on an otherwise clean governance promised by Modi Government when it came to power in 2014.

NSEL-FTIL forced merger

The Ministry of Corporate Affairs (MCA) in the Government of India issued on October 21, 2014, a draft order of amalgamation of NSEL (National Spot Exchange Limited - Dissolved Company) with FTIL (Financial Technologies India Limited - Transferee Company) under Section 396 of the Companies Act, 1956. The reasons for proposing such an order of amalgamation have been set out in the Annexure to the Draft Order.

FTIL changes its name to '63 Moons Technologies'

As per Wikipedia "Mooning is the act of displaying one's bare buttocks by removing clothing, e.g., by lowering the backside of one's trousers and underpants, usually bending over, whether also exposing the genitals or not. Mooning is used in the English-speaking world to express protest, scorn, disrespect, or provocation, or can be done for shock value, fun, or as form of exhibitionism. Some jurisdictions regard mooning to be indecent exposure, sometimes depending on the context. "

However, The company said the change was “inspired from the 63 moons of Jupiter, the most powerful planet in the universe that stands for knowledge, wisdom, foresight and, above all, growth and prosperity”.

Given the turbulent phase it has been going through recently, FTIL would need all the attributes of Jupiter. The entity has been under adverse scrutiny from the Forward Markets Commission, the economic offences wing of the Mumbai and Delhi police forces, the enforcement directorate and the ministry of corporate affairs, for in the Rs 5,574 crore settlement fraud at the National Spot Exchange, promoted by it.

Modus Operandi NSEL fraud and action take by Enforcement Directorate

The Enforcement Directorate (ED) has attached bonds worth Rs 135 crores in possession of 63 Moons Technologies Ltd (earlier known as FTIL), in the National Spot Exchange Ltd (NSEL) case. With this, the total attachment in the case, including those of others, has reached to Rs 2,191 crores.

Earlier, the agency had attached properties of 63 Moons Technologies in the form of bonds/securities and bank balances worth Rs 1,118 crore out of total proceeds of the crime of Rs 1,254 crores laundered by NSEL and FTIL.

Till now, the agency probe revealed that NSEL had laundered proceeds of crime to the extent of Rs 1,102.03 crore and Rs 236.05 crore, and these proceeds of crime have been placed channelled, layered and integrated by NSEL in the form of personal expenses, operating expenses and financial expenses.

In year 2013, the ED had registered money laundering case in the NSEL scam under the provisions of PMLA, 2002 on the basis of FIR registered by EOW. The PMLA investigations revealed that NSEL was acting as a platform for these defaulters and NSEL was earning in the process of charging various fees, charges and penalties like application processing fees, annual subscription fees, delivery fees warehouse receipt transfer charges, procurement commission, penalties on shortages penalty for trade cancellation, loading and unloading charges, penalty on ucc code, penalty on withheld demat units, recurring charges etc.

The gross income earned by NSEL from such paper transactions was Rs 1,112.03 crores from 2008-09.

The probe revealed that trades executed on NSEL's portal were rarely backed by the equivalent quantity of goods which was in the knowledge of the NSEL executives.

All circulars launched were discussed in the board meeting comprising key Management Personals of FTIL in the Board of NSEL and the board used to ratify and approve the same.

By virtue of its share holding of 99.99 per cent in NSEL, FTIL has complete authority over the all the affairs of NSEL enabling it to appoint all the Directors on the board of NSEL, through them effective control over the functioning of NSEL.

It was alleged that the accused persons in the said case hatched a criminal conspiracy to defraud the investors, induced them to trade on the platform of NSEL, created forged documents like bogus warehouse receipts, falsified the accounts and thereby committed criminal breach of trust against around 13000 investors to the tune of Rs 5600 crores.

Thus NSEL, its promoters, the senior management of NSEL and the 25 defaulters indulged in criminal conspiracy, cheating and collusion, wherein NSEL allowed trading on commodities by sellers, without ensuring goods of appropriate quantity and quality stored in the exchange controlled warehouses.

"It resulted in thousands of investors trading in non-existent goods and thereby genuine investors were defrauded of their investments by way of serious misappropriation", said the official.

The NSEL board comprising Key Management Personals of FTIL (as Shri Jignesh Shah, Shri Joseph Massey) had all the authority to frame the bye-laws, rules and regulations of the company.

Thus, FTIL was fully responsible for the functioning of NSEL and Board of NSEL, consisting key management personnel of FTIL, allowed to continue to trade in spite of repeated defaults deliberately towards non existence of the stock.

The Mint’s Jayshree P. Upadhyay, recently published a detailed report on how an American company, Modulus Financial Engineering Inc. has sued Financial Technologies (India) Ltd. before the Bombay High Court for infringing the company’s copyright in its trading software and has claimed $480 million dollars or Rs. 3,190 crores, in damages. FTIL is a company which has developed a reputation for being the rare Indian company to successfully develop software products for the financial markets. Its main clients are brokers who trade in financial exchanges. The lawsuit by Modulus severely threatens FTIL’s reputation as an innovative company apart from destroying client confidence in the company. As most of our readers may also be aware, FTIL is also under investigation for its role in the massive scandal involving its subsidiary NSEL. The company is also battling a government order forcing the merger of the company with its scam ridden subsidiary NSEL.

CBI nails nine shell companies in NSEL scam 

The CBI has found the role of nine shell companies, including several defaulters, for allegedly diverting proceeds related to the National Spot Exchange Limited (NSEL) scam to other avenues. 

The agency in its probe of bank frauds has found that NSEL run by FTIL was allegedly using nine shell companies namely Brinda Commodity Pvt Limited, Tavishi Enterprises, Mohan India, PD Agro Processors, Dunar Foods, White Water Foods, ARK Imports, Vimaladevi Agrotech and Yathuri Associates.

References

  1. ↑ "Executive Team". National Spot Exchange. Retrieved 16 April 2016.
  2. ↑ http://www.nationalspotexchange.com/

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