The Securities and Exchange Board of India (SEBI) has ordered the freezing of assets of some of the former directors of Multi Commodity Exchange of India (MCX) and 63 Moons Technologies — formerly known as Financial Technologies India Ltd. (FTIL) — for alleged trading in the shares of these companies on the basis on unpublished price sensitive information at a time when the National Spot Exchange Ltd. (NSEL) was facing regulatory probes.
The capital market watchdog will also impound a sum of ₹126.04 crore from a total of 13 persons. This, according to SEBI, is the quantum of loss, including interest, caused by the entities by trading based on the price sensitive information that was not available in public domain.
“The persons... are directed not to dispose of or alienate any of their assets/properties/securities, till such time the individual amount of loss averted is credited to an Escrow Account,” said the SEBI order on Wednesday.
The entities are to submit a complete list of their inventory in seven days.
As per the SEBI probe, the entities traded in the shares of 63 Moons and MCX in the period between April 27, 2012 and July 31, 2013. Incidentally, April 27, 2012 was the day when the Department of Economic Affairs issued a show-cause notice to NSEL regarding the contracts that were available for trading on the spot exchange.
Finally, on July 31, 2013 – post a probe and action by various government bodies and regulators – NSEL suspended trading in all contracts except e-series contracts and deferred settlement of all pending contracts. Later on, it emerged that NSEL was in the midst of a ₹5,600 crore settlement scam.
The NSEL scam had an impact on the stock price of both, MCX and FTIL and the SEBI probe alleged that the directors sold shares ahead of the price crash and averted potential loss. NSEL is a wholly-owned subsidiary of FTIL, which also earlier held 26% in MCX.
The former directors that have been alleged to trade in the shares of 63 Moons include Shreekant Javalgekar, Asha Javalgekar, Manish Shah, Prakash Shah, Hariharan Vaidyalingam, Dhanashri Iyengar and Bharath Sheth.
Similarly, former directors of MCX named in the SEBI order are Joseph Massey, Paras Ajmera, Anjani Sinha, Tejal Shah, Mehmood Vaid along with Hariharan, Javalgekar and Asha Javalgekar.
