NSEL Scam: SEBI Finds Executives At MCX, 63 Moons Guilty Of Insider Trading

The market regulator has held directors and top executives of companies related to Jignesh Shah, founder of India's biggest commodity exchange, guilty of insider trading when the National Spot Exchange scam unravelled.

The executives sold shares of the Multi Commodity Exchange Ltd., then promoted by Shah, and NSEL's parent, now called 63 Moons Technologies Ltd., based on unpublished price-sensitive information to avoid losses, the Securities and Exchange Board said in two separate orders. It ordered to impound the losses averted, along with 12 percent interest.

The executives include relatives of Shah and Shreekant Javalgekar, former manging director and chief executive officer of the MCX.

The NSEL, promoted by Financial Technologies, was ordered to stop trading after a probe found that it allowed trading against stock that didn't exist in warehouses. NSEL had failed to settle Rs 5,600 crore worth of investor dues.

The SEBI order says…

• The department of consumer affairs issued a show-cause notice to NSEL on April 27, 2012, which was a price-sensitive information.
• It remained unpublished till July 31, 2013, when NSEL issued a circular suspending trading in one-day forward contracts.
• In MCX, Joseph Massey, Shreekant Javalgekar, Asha Shreekant Javalgekar, Paras Ajmera, Anjani Sinha, Tejal M Shah, Hariharan Vaidyalingam and Mehmood Vaid, were “insiders” as per SEBI rules.
• In 63 Moons, Shreekant Javalgekar; Asha Shreekant Javalgekar; Manish P Shah; Prakash Shah; Hariharan Vaidyalingam; V Arvindkumar Iyengar; Dhanashri Iyengar and Bharat Kanaiyalal Sheth, were “insiders”.
• They were reasonably expected to have had access to the information and sold “substantial” MCX shares when only they had the information, SEBI said.

The regulator has asked them to submit details of all their assets within seven days and reply to the regulator within 21 days.