Financial Technologies chief Jignesh Shah arrested in NSEL scam
08 May 2014
Jignesh Shah, the chairman of Financial Technologies (India) Ltd, was arrested in Mumbai on Wednesday in connection with the alleged fraud at commodity bourse National Spot Exchange Ltd.
Shah has been under police investigation since August after the NSEL, promoted by Shah's FTIL, abruptly suspended trade in most of its commodities contracts on 31 July.
Investigations by commodities regulator the Forward Markets Commission (FMC) showed what it said was a Rs5,500 crore fraud, as the exchange defaulted on obligations to market participants because it did not have enough collateral.
Rajvardhan Sinha, additional commissioner in the Mumbai police economic offenses wing, said Shah had run "a criminal conspiracy with other accused who were running this exchange".
A Financial Technologies spokeswoman said the company was working on a statement regarding the matter.
Financial Technologies and Shah have previously denied knowledge of any fraudulent activity at NSEL, which ceased operations in August.
Shah's arrest is the latest blow to Financial Technologies, which also sells trading software.
The company was ordered by the Securities & Exchange Board of India in March to cut its stake in a separate commodities exchange, Multi-Commodity Exchange of India Ltd (MCX), from 26 per cent to 2 per cent.
The FMC had ruled that MCX was not "fit and proper" to run a bourse (See: Jignesh Shah, FTIL not fit and proper to run a bourse: FMC).
Financial Technologies subsequently announced it would sell the 24 per cent MCX stake, although it has not yet completed the sale.