A special Prevention of Money Laundering Act (PMLA) court granted bail to Shah in the sum of Rs 2 lakh. The Enforcement Directorate (ED) had arrested Shah on July 12 under Section 19 of Prevention of Money Laundering Act (PMLA).
The agency had filed a 20,000-page charge sheet against National Spot Exchange Ltd and 67 others in a Mumbai court in March last year, explaining that National Spot Exchange Ltd funds were laundered and “illegally ploughed into purchase of private properties”.
The charge sheet detailed money trail amounting to Rs 3,721.22 crore. The Enforcement Directorate had registered a criminal case under the Prevention of Money Laundering Act in 2013 to probe the case, along with the Economic Offences Wing (EOW) of Mumbai police.
The Centre had also recently directed the Maharashtra government to expedite the resolution of the case by quickly auctioning assets worth Rs 6,116 crore attached so far and refund investors at the earliest. National Spot Exchange Ltd ‘s payment troubles started after it was ordered by regulator Forward Markets Commission (FMC) in July 2013 to suspend spot trade in most of its contracts due to suspected trading violations.
The exchange could not settle the outstanding trades, leading to investigations by the police and regulators to find out whether the exchange had defrauded traders by not enforcing rules requiring sufficient collateral to be set aside. Financial Technologies India Ltd (FTIL) blamed National Spot Exchange Ltd executives and the trading parties for the default. There were 24 members who defaulted payment to about 13,000 investors.
Last week, the Bombay High Court allowed Jignesh Shah-led 63 Moons Technologies Ltd (formerly FTIL) to operate its bank accounts to meet day-to-day operational expenditure such as salaries of employees and payment of statutory liabilities.
The permission to operate bank accounts, secured recently by the Economic Offences Wing, was granted by a bench headed by Justice Abhay Oka after the investigating agency said it had no objection, subject to certain conditions. One of the conditions was that the company would have to submit an audited copy of expenses to the Economic Offences Wing every month to which it agreed.
Last month the Economic Offences Wing had secured assets worth Rs 2000 crore of the company. The company had approached the High Court for a stay, but got no relief. On Thursday, noting that the ‘push factor’ of paying high commission to sales force is a driving force for proliferation of illegal deposit schemes, market regulator Sebi said such payouts for sale of all fund-raising will be capped at 5 per cent to prevent mis-selling soon.
“The ‘push factor’ was brought to the notice of the Standing Committee of Parliament which has recently submitted a report on change in legislation and one of the things which they have accepted is the existence of this push factor,” Sebi whole-time member S Raman said. “Now, very soon, if the legislation is passed, and when it is passed, commission of anything more than 3-5 per cent for any type of fund raising in this country will be illegal.”