NSEL gave investors’ data to FMC in August ; Emails from NSEL to FMC stated that there were 12,735 investors to whom an outstanding payment of Rs.5,402.71 crore was due.

Livemint: Nagpur: Saturday, 21 March 2015.

The National Spot Exchange Ltd (NSEL), which is now questioning the authenticity of investors claiming to have lost money in the `5,574.34 crore payment fraud at the commodities bourse, had submitted details of such investors to the Forward Markets Commission (FMC) in August last year.

Two emails were sent by NSEL officials to the commodities market regulator on 8 August 2014. One was from Saji Cherian, managing director and chief executive officer, NSEL. Both letters stated that there were 12,735 investors to whom an outstanding payment of `5,402.71 crore was due. The second email, sent by Alpesh Shah, an official of the market operations department of NSEL, gave a break-up of the money paid to some of the investors.

Mint has copies of both the emails.

The emails gain significance as NSEL’s new management has been questioning the genuineness of NSEL investors. Investor groups and brokers have consistently claimed that about 13,000 investors were affected by the fraud. NSEL officials, while addressing a media conference on Wednesday, said not all brokers had submitted the know-your-client (KYC) details of small investors whose dues have been paid either fully or partly.

“There were about 13,000 unique client codes uploaded by the brokers, which resulted in the number of trading clients to be purportedly about 13,000 and this data is what is everyone talking about. However, the point to note is that a UCC identifies the transaction but not the genuineness of the trading client,” said Prakash Chaturvedi, joint managing director, NSEL in an emailed response adding that even the Bombay high court has made observations on the existence of genuine clients in its order dated 22 August 2014.

As per NSEL’s emails to FMC, there were 608 investors with dues of less than `2 lakh and 6,445 investors with dues between `2 lakh and `10 lakh. A total of 4,901 investors had dues of `10 lakh to `1 crore while 660 investors had dues in the range of `1 crore to `5 crore. There were 121 clients with dues in excess of `5 crore each.

NSEL has settled the dues of more than 40,000 investors in its e-series contracts without raising any doubts on the authenticity of such entities. E-series contracts were those in which retail investors could buy and sell commodities like gold, silver, platinum, copper, zinc, lead and nickel in dematerialized form.

Investor groups have also questioned NSEL’s contention that not all investors on the exchange were genuine, saying that the bourse has itself filed the investor details with a government authority.

“The e-series units are held in demat form with NSDL/CDSL which are subject to stringent regulation and compliance. Therefore the need to verify these clients did not arise,” said Chaturvedi.

“The intent (of NSEL) is only to obfuscate the main issue of recovering money from defaulters and paying the investors. Through RTI (Right to Information Act), we know that it had filed the details of each and every investor along with the permanent account number and dues. So now it cannot question the genuineness of investors,” said Ketan Shah of the NSEL Investors Forum.