Enforcement Directorate probing money laundering at NSEL

In a new twist to the Rs5,600-crore payment crisis at the National Spot Exchange Ltd (NSEL), the Enforcement Directorate (ED) has initiated a preliminary inquiry into suspected money laundering at the beleaguered bourse.

ED said it has registered a case under Prevention of Money Laundering Act (PMLA) against the NSEL board, including its vice chairman Jignesh Shah, and directors of defaulting companies.

The Economic Offences Wing (EOW) of Mumbai police is investigating the scam.

ED has taken up the probe into possible money laundering since it administers Foreign Exchange Management Act (FEMA) and Prevention of Money Laundering Act (PMLA).

ED has powers of making arrests where cases are registered under PMLA, an offence which makes it a criminal act.

A case is registered if there is a prima facie evidence suggesting that an offence has been committed by a person or persons involved in the case.

The EOW filed the FIR against Jignesh Shah, chairman and managing director of Financial Technologies (FT), and Joseph Massey, managing director and CEO of MCX Stock Exchange, on 30 September.

They have been charged with cheating, forgery, breach of trust and criminal conspiracy, among other charges, in connection with the payment crisis at NSEL.

The Bombay High Court has, meanwhile, passed an interim order to the effect that any financial settlement or remat of e-series gold or silver contracts can take place only after 25 October. This has been done in response to petitions filed by certain investors who sought a stay on the settlement of e-series.

It has directed commodity market regulator Forward Markets Commission (FMC) and EOW to verify claims by petitioners in case of investors whose bona fides are suspect.

NSEL has been facing problems in settling Rs5,600 crore dues of 148 members / brokers, representing 13,000 investor-clients, after it suspended trading on 31 July on government's direction.