Sebi directs 13 people to disgorge ~124 crore in NSEL case

They sold shares of FTIL, MCX on insider info to avert losses, says regulator

The Securities and Exchange Board of India (Sebi) directed 13 officials of the Multi Commodity Exchange (MCX) and 63 Moons Technologies, formerly Financial Technologies India or FTIL, to return a total of ~124 crore (including annual interest of 12 per cent) made unlawfully.

Among those so directed are Paras Ajmera (~72 crore), Hariharan Vaidyalingam (~46 crore), Manish Shah (~2 crore), Shreekant Javalgekar (~1.1 crore), Joseph Massey (~87 lakh) and Anjani Sinha (~12 lakh). All 16 were either directors or held key management positions in FTIL or MCX.

Sebi’s investigations revealed they, while in possession of unpublished and price-sensitive information (UPSI) on the National Spot Exchange (NSEL), sold shares to avoid huge losses. NSEL was a fully-owned subsidiary of FTIL. MCX was also founded by FTIL.

A notice dated April 27, 2012 to NSEL by the Union government’s department of consumer affairs (DCA) had triggered a chain of events, subsequently leading to a ~5,600-crore payment crisis. In the notice, DCA had questioned NSEL on alleged violation of norms. On July 31, 2013, NSEL had suspended trading in most of its contracts and deferred settlement of pending ones. According to Sebi, the DCA notice remained a UPSI till July 31, 2013. Entities who sold in the FTIL and MCX shares between April 27, 2012, and July 31, 2013, did so while in possession of UPSI, violating the insider trading norms, Sebi said in the order.

After NSEL announced suspension of trading on July 31, 2013, shares of both MCX and FTIL saw a sharp plunge in the next few trading sessions. Sebi has directed those penalised to not dispose of any of their assets till they transfer the amount specified to an escrow account.