The Enforcement Directorate (ED) has filed a charge sheet against 54 individuals and entities, including 19 brokerage firms and their directors, in connection with the National Spot Exchange Limited (NSEL) trading fraud. These parties are accused of collaborating with NSEL officials to deceive investors into trading on the platform with promises of substantial returns.
The ED’s investigation revealed that these brokerage firms misled clients by providing false assurances about the legitimacy of NSEL’s trading platform. They promoted illegal paired contracts and facilitated trades without ensuring the actual possession of commodities, a violation of spot trading norms. The brokerage firms earned approximately ₹34.74 crore through these illicit activities, which they then utilized in their business operations.
As part of its ongoing probe, the ED has provisionally attached assets worth ₹3,288.76 crore through 32 provisional attachment orders. Prior to this, the agency had submitted six charge sheets against 94 accused individuals in the same case.
The NSEL scandal came to light in July 2013 when the exchange suspended trading following a government directive that prohibited new contracts and allowed only the settlement of existing ones. Investigations uncovered that several members had engaged in trading without possessing the underlying commodities, leading to a significant financial discrepancy.
The ED initiated its investigation based on a First Information Report (FIR) filed by the Economic Offences Wing (EOW) of the Mumbai police on September 30, 2013. The FIR accused NSEL’s directors, key officials, and 25 defaulters of conspiring to defraud investors by creating forged documents, including bogus warehouse receipts, and manipulating accounts. This fraudulent activity resulted in a loss of approximately ₹5,600 crore affecting around 13,000 investors.
Further investigations revealed that the funds collected from investors were diverted by the borrowers and trading members of NSEL into other ventures, such as real estate investments and repayment of existing debts.
In a significant move, the ED had previously attached assets worth around ₹1,170 crore belonging to M/s 63 Moons Technologies Ltd (formerly known as FTIL), the promoter of NSEL. The agency accused NSEL, its promoters, senior management, and various defaulters of criminal conspiracy and cheating. They allegedly facilitated trading of commodities without ensuring the actual availability of goods in exchange-controlled warehouses, leading to fraudulent activities that deceived thousands of investors.
The ED’s charge sheet underscores the alleged negligence of NSEL’s management in implementing necessary checks and controls. This negligence allowed key officials to perpetrate fraudulent activities, resulting in significant financial losses for investors.
The ED continues its investigation to trace and attach assets acquired through the proceeds of the crime, aiming to bring all culpable individuals and entities to justice.
