CBI registers new case against Jignesh Shah, MCX
The Central Bureau Investigation (CBI) registered a new case against 10 accused for alleged irregularities in grant of a licence in 2003 to set up the Multi Commodity Exchange (MCX).
The 10 include the exchange, 63 Moons Technologies (erstwhile FTIL), its chairman emeritus, Jignesh Shah ( pictured), and former officials of the then Forward Markets Commission (FMC). The names of those accused in the report are Joseph Massey, A K Bhatta, Keval Ram, B C Khattua and Rajeev Agarwal and Vishal Nair.
Prior to its absorption into the Securities and Exchange Board of India, it was FMC which regulated commodity markets. Also on Friday, CBI officials conducted an extensive search operation at nine locations, including Mumbai, Gwalior and Shimla. A CBI official said the case was against entities having facilitated MCX in getting the status of a nationwide commodity exchange, though it was not eligible.
According to the CBI, shah and FTIL illegally retained shares beyond the permissible 26 per cent and thereby derived wrongful gain worth ~1.37 billion by selling 2.6 million excess share at the rate of ~1,032 per share.
“The permission was granted 15 years ago, when the country did not have a pan-India commodity exchange. The permission to set up a nationwide commodity exchange was not only granted to MCX but to three other entities — NCDEX, NMCE and N-BOT. Thereafter, 63 Moons (then known as FTIL) took MCX to the level of being the number one commodity exchange in India and number three in the world,” said a spokesperson for 63 Moons.
Sources said the Kabra committee in 2001 recommended opening the commodity futures market and to allow nationwide online exchanges to trade in commodity futures. Those days, FMC was regulating only forward trading in commodities, happening in several regional exchanges. The Kabra panel proposed these be traded in exchanges to be set up in line with the NSE.
After the government invited applications for such exchanges in the first round, only two names were approved. One from the Indore-based promoter of soybean exchange NBOT and another being Kailash Gupta, who set up the Ahmedabad-based National Multi Commodity exchange. Another two entities received a licence in the second round — ICICI-promoted NCDEX and Jignesh Shah-promoted FTIL, which set up MCX. ICICI later sold its stake and exited.
Sources say CBI is also looking at the clearance given by the FMC to MCX for an initial public offer (IPO) in 2012, allegedly against certain regulations. MCX sought exemptions from some norms for the time being to float an IPO in 2012. FMC gave the exemption.
63 Moons statement added, “We have been forced to exit MCX in 2014 and all the documents related to the permission are obviously with MCX. Despite this, the search is being conducted on us and our chairman emeritus (Jignesh Shah). During the search at his residence, the CBI did not find any single incriminating material and/or document. The agencies are being misled by vested interests and trying to divert the attention from the truth getting established and prejudice the minds of investigating agencies and ongoing judicial matters. However, we have full faith in the judiciary and continue to believe that ultimately truth shall prevail.”