Stepping up its probe in the NSEL case, the Economic Offences Wing of Mumbai Police has served summons to directors of nearly 100 commodity brokerage firms, including some marquee names, who are alleged to have indulged in large-scale irregularities and suspected forgery with their trading clients, officials said on Friday.
These notices, asking the directors of these brokerage firms with estimated outstanding receivables of over Rs 4,200 crore in the case, are being served since the beginning of the year and have continued till this month, the officials added.
They have been asked to personally depose before the EOW with information on trade modification details of all their clients, broker and client ledger accounts, client settlement account details, banking details, brokerage earned, client PAN and KYC, visits to warehouses and a host of other functional details.
The brokers have been denying any wrongdoing on their part and have instead put the blame for the NSEL payment crisis on the exchange and its erstwhile promoters.
The long-running EOW investigation covers "NSEL, its directors, FTIL (now, 63 Moons Technologies), its directors, borrowers, brokers and others for committing several acts of forgery and criminal breach of trust pursuant to a criminal conspiracy hatched by them".
Those served with the summons include directors of Motilal Oswal Commodities Brokers Pvt Ltd, Anand Rathi Commodities, Systematix Commodities, Way2Wealth Commodities, India Infoline Commodities and Progressive Comtrade, among others.
According to details available with the EOW, the five brokerage firms with the maximum amount of receivables include Anand Rathi Commodities, India Infoline Commodities, Geojit Comtrade, Systematix Commodities and Motilal Oswal Commodities Brokers.
Others with significant receivable amounts include Philip Commodities India, Emkay Comtrade, JM Financial Comtrade, Ventura Commodities, Arihant Futures & Commodities, SPFL Commodities, RR Commodity Brokers, Nirmal Bank Commodities, India Nivesh Commodities and Suresh Rathi Commodities.
Together, the 100 brokerage firms have an amount of Rs 4,205 crore receivables against them, the officials added.
In 2019, capital markets regulator Sebi passed orders against some of these brokers in the NSEL case, declaring they were "not fit and proper" to continue as a commodity broker. These orders followed a report from the EOW and complaints filed by the NSEL against the brokers.
However, those brokers later said the orders will have no impact on their businesses as they could continue working under trading licenses received by their parent firms.
The brokers also challenged Sebi orders before the Securities Appellate Tribunal (SAT), which was also approached by the NSEL which called itself an affected party and alleged that the regulator had failed to consider all the allegations and material in its complaint against brokers.
However, the tribunal refused to admit NSEL's plea, prompting the bourse to seek the intervention of the Supreme Court, pursuant to which the SAT was asked to allow the NSEL to present its case.
While the NSEL crisis came to light in 2013, brokers continued to evade any punitive action till the EOW's forensic report in 2015 talked about their alleged involvement in various irregularities and suspected forgery with their trading clients.
Many brokers have been accused of misguiding their trading clients, routing their money through benami accounts and indulging in various other wrongdoings, including under the pretext of loans against securities in violation of securities laws.
