SEBI hesitates to move against big NSEL defaulter brokers

Why has the investigation into a mega scam involving a huge sum of money gone around in circles rather than reach a conclusion? Whose are the hidden hands behind such a lack of targeted action?

It has been more than twoand-a-half-years since the irregularities of top brokerage houses surfaced in the Rs 5,600 crore NSEL payment default, with Securities and Exchange Board of India (SEBI), the market regulator, slapping showcause notices to them. But for some reason, no one is talking about penalising the broking entities. Is it that they are “too influential to touch”?

The five are among India’s largest brokerages: Motilal Oswal Commodities, Anand Rathi Commodities, Geojit Comtrade, India Infoline Commodities and Philips Commodities. Their deeds have come to the fore, exposing their role at large in the NSEL crisis. Although the proceeds of the imbroglio have been traced to the 17 defaulters, so far only NSEL, FTIL and its founder have been prosecuted, and that too without any adjudication.

It is not only the market regulator SEBI but also other probe agencies such as Serious Fraud Investigation Office (SFIO) and Economic Offences Wing of Mumbai Police (Eow-mumbai) that have found Nsel-related brokerages guilty. The SFIO, which recently submitted its report to the Ministry of Corporate Affairs (MCA), asked SEBI to move against the brokerage firms, including putting them through the not “fit and proper” test. After the SFIO report, Sebi—based on the findings of Eow-mumbai— has issued another set of