Tuesday, December 17, 2013

EOW freezes NSEL bank accounts; no payout to investors today

The economic offences wing of the Mumbai Police today froze the bank accounts of the crippled NSEL even as the CBI started a probe into alleged duping of customers and irregularities by the commodity exchange.

The NSEL defaulted on its committed weekly payout for the seventh consecutive time today after the accounts were frozen.

“Today, we have frozen 58 bank accounts, including the accounts of the NSEL and others involved in the crime,” Additional Police Commissioner (EOW) Rajvardhan Sinha told the news agency this evening.

The action comes a day after police registered an FIR in connection with the `5,600-crore payment crisis at the National Spot Exchange Ltd (NSEL), promoted by Jignesh Shah-led Financial Technologies (FT).

Sinha said the agency completed raids on as many as 54 offices and premises of the exchange, its promoters and defaulters.

The Central Bureau of Investigation (CBI) said the EOW of its Mumbai branch had received complaints from investors who lost money with the NSEL.

“We have registered a preliminary enquiry to look into all aspects comprehensively,” CBI spokesperson Kanchan Prasad said in New Delhi today.

The NSEL, which was scheduled to pay `174.72 crore to investors today, confirmed the EOW action on its bank accounts and blamed the default on the freezing of an escrow account.

“We could not make the payout in view of the EOW freezing our bank accounts, including the escrow account,” NSEL said in a statement.

“NSEL is unable to make any payouts today. We have informed FMC (the regulator) of this development. We are taking legal advice to de-freeze the settlement bank accounts and investors and members will be notified in due course,” the statement added.

Police sources said they did not freeze the escrowaccount as it was opened for the specific purpose of making payouts to investors and brokers. The troubled exchange owes `5,600 crore to a number of brokers and 13,000 investors.

The escrow account was opened by NSEL after it was ordered by the Government to ensure payouts on priority to investors after the exchange halted trading two months ago.

The police officer evaded a direct reply when asked if the frozen bank accounts included those of Shah, Chairman and Managing Director of FT, and Joseph Massey, Managing Director and CEO of MCX Stock Exchange, which is promoted by FT, both named accused in the FIR.

“These were the bank accounts of the accused involved,” he said.The Ministry of Corporate Affairs has ordered inspection of accounts of NSEL and its promoter entity FT. A senior ministry official said it is checking if these entities violated any rules under the Companies Act.

Wednesday, 02 October 2013 | PNS | Mumbai

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