The Central Bureau of Investigation (CBI) arrested Financial Technologies promoter and MCX founder Jignesh Shah on Tuesday after conducting searches at nine places. The case relates to alleged connivance by SEBI officials with Shah in fraudulently renewing recognition of MCX-SX for currency derivatives trading, in 2009-2010.

The CBI had filed an FIR in the case under IPC sections related to criminal conspiracy and cheating, besides provisions of the Prevention of Corruption Act, for alleged abuse of official position. Shah was taken to CBI headquarters for questioning and will be produced in court on Wednesday for custody. The case was registered against Shah, four SEBI officials and others.

“Incriminating documents, including transfer of shares by private companies, FDR, purchase of assets etc., recovered during searches are being scrutinised for further investigation,” the CBI said in a statement.

The agency also raided the residences of former employees of FTIL, Multi Commodity Exchange, Metropolitan Stock Exchange (formerly MCX-SX) as well as SEBI Executive Director Muralidhar Rao and former Executive Director JN Gupta.

Jignesh Shah-promoted companies allegedly entered into a buyback arrangement with financial institutions in violation of the Securities Contract Regulation Act, 1956, and other regulations and deliberately suppressed this material fact while applying for extension of recognition to conduct currency derivative trades, said the CBI. SEBI allegedly rejected FTIL’s request for trading in other segments in 2010, but renewed registration of the stock exchange even though it was not compliant, it added.

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