On Tuesday the founder and former chairman of Financial Technologies (India) Ltd (FTIL) Jignesh Shah were arrested by The Enforcement Directorate (ED), charge sheet in the National Spot Exchange Ltd (NSEL) commodity exchange fraud. This has led to the drastic 6% drop in the Financial Technologies share price.
A senior ED official on condition of anonymity made a statement that Shah has been arrested for not cooperating with the investigative processes.ED is a specialized financial investigation agency under the ministry of finance. According to ED officials, the proof of money laundering against Shah has been found, under the Prevention of Money Laundering Act, 2002 (PMLA).
This is the second time Shah has been taken into custody in connection with the NSEL fraud. He was arrested in May 2014, by the Economic Offences Wing of the Mumbai Police and was granted bail by the Bombay high court three months later. Shah will be presented before the special PMLA court on Wednesday by the ED. It had filed charge sheet in the NSEL scam in April 2015.
In the charge sheet, the ED alleged a criminal conspiracy leading of Rs.5,574.35 crore scam at NSEL, which was 99.99% owned by FTIL. Shah was the then chairman of FTIL. ED had also registered a criminal case against Shah under the PMLA in 2013.
Also, ED had added properties worth Rs.600 crore in the case. This value is inclusive of the properties of defaulters such as N.K. Proteins, PD Agro Processors and Mohan India. The review group of the department of economic affairs, in June, had asked the ED to start auctioning the attached properties.Hearings on the case regarding the ED’s charge sheet have been on hold due to technical reasons.
Last Thursday, a special court on money laundering offered some relief to the 68 accused in the NSEL scam, including Shah, who were supposed to make a personal appearance before the court. Shah was granted an exemption on medical grounds.
The crisis at NSEL came to light when the exchange suspended trading in all but its e-series contracts. This incident took place on 31 July 2013 and these, too, were suspended a week later.
The suspension may have been caused by an instruction from the ministry of consumer affairs to the exchange, asking it not to offer futures contracts. A spot exchange isn’t supposed to do so, but NSEL was doing that.
Market report:
The news of Shah’s arrest had affected Financial Technologies Share Price to a large extent. Financial Technologies share price made a drastic drop of about 6% and had been trading at Rs. 85.80. Financial Technologies share price recently made its lifetime low value of Rs. 71.50 on 29-Feb-16. Although, at a time, it has touched the lifetime high value of Rs. 3044.70.