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A three-way fight is now on in the NSEL scam — broker-members of the now defunct exchange, investors and the bourse promoters.
After NSEL went to the Bombay High Court (HC) seeking attachment of brokers’ assets, the latter too are seeking to move the HC against the spot exchange and its investors. They will file an intervention petition in the HC with regard to NSEL’s recent move, sources told BusinessLine .
The brokers were just facilitators of trades and investors cannot say they were ignorant as a warehousing receipt was provided to them for their trade, a member of a brokers’ body told BusinessLine .
“There was a clearing member involved, which was the responsibility of the exchange. Blaming brokers now suits investors who were hit by the fraud,” said another broker.
A counter-argument filed by the brokers with SEBI and the Mumbai police was seen by BusinessLine . It said the show-cause notice and the first information report naming them as accused were without basis as they did not provide details of any instance or action of brokers that constituted any violation of law. Only vague and sweeping allegations had been made against them.
‘Attachment inevitable’
On Thursday, BusinessLine reported that NSEL had told the HC that properties of around 600 brokers should be attached as they too were made accused in the case by the Mumbai police, and SEBI had issued show-cause notice against them. The property and all assets of NSEL and its promoters were attached under the Maharashtra Protection of Interest of Depositors (MPID) Act soon after the spot exchange scam broke out in 2013. But the assets of brokers were not touched.
NSEL told the court that attachment of assets of brokers under the MPID Act was inevitable and the same was also stated categorically by a Division Bench of the HC in October 2018. Leading investors in NSEL told BusinessLine that there were provisions for attachment of brokers’ property under the MPID and they would support such a move if that can help recover their money.
“A Division Bench of the Bombay HC, in its October 24, 2018, order had categorically observed that there was no justification for the Maharashtra government for not attaching the properties of the brokers under Section 4 of MPID,” stated the NSEL petition.
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