HC grants Jignesh Shah bail: All you need to know about the NSEL scam

Jignesh Shah, the founder of Financial Technologies (India),thatset up the hugely successful commodity futures exchange MCX, has been granted bail by the Bombay High Court in the Rs 5,600 crore NSEL scam.

He was arrested in May by the Economic Offences Wing of the Mumbai police for his alleged complicity in the scam.

The scam came to light in August last year, when his group company National Spot Exchange Ltd (NSEL) faced a payment crisis.

By late July, nearly 18,000 investors had allegedly lost millions due to the financial irregularities.

For a middle class man, who was born and brought up in Kandivali, Shah’s journey easily resembles a Bollywood style rags-to-riches potboiler. From the northernMumbai suburb to the Forbes billionaires list - in 2008 he was worth $1.1 billion - his business life has been peppered with controversies.

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Critics have picked holes in the meteoric rise of his business. According to an earlier report in The Economic Times, his business plan was unconventional “backed by an extensive media campaign, hard work, combative style, brilliance and practices that are perceived by many as not exactly kosher”.

Here is a timeline of Jignesh Shah’s rise and fall:

April, 1988: Jignesh Shah-led Financial Technologies (India) Ltd (FTIL) was incorporated as company in Chennai. It would overtime become a giant with nearly 40 subsidiaries.

November 2003: Jignesh Shah enters into the business of commodity futures markets and commences MCX operations.

October 2008: FTIL subsidiary National Spot Exhange Ltd (NSEL), which is at the centre of the Rs 5,600-crore scam, commenced live spot trading in commodities.But while the spot exchange was allowed only to trade commodities at prevailing market prices, it started allowing members to trade 25-30-day buy or sell contracts. This amounted to futures trading. In other words, spot trades involved only those commodities that were available in the warehouses, while NSEL allowed trading in commodities that were not available in warehouses also. This amounted to violation of norms and interestingly went on for four long years.

May 2012: The Consumer Affairs Ministry issues show cause notice to NSEL saying that the spot contracts allowed on the bourse violated forward contracts law.

July 31, 2013: After the government order, NSEL suspends most spot trading contracts in view of violation of regulatory norms, precipitating a payment crisis.

August 6, 2013: The government bans trading in e-series contracts on NSEL, resulting in the complete halt of trading at the exchange. The crisis is now a full blown scam as investors allege loss of millions.

August 15, 2013: NSEL submits 33-week settlement plan to regulator Forward Markets Commission (FMC).

August 20, 2013: NSEL defaults the first settlement and sacks exchange CEO & MD Anjani Sinha.

September 2013: The finance ministry takes over regulation of commodity futures markets from the consumer affairs ministry after the payment crisis surfaced at NSEL.

October 9, 2013: NSEL Vice-President Business Development Amit Mukherjee arrested, the first arrest in the scam.

October 10, 2013: Jignesh Shah resigns as vice chairman and shareholder director of another group exchange MCX-SX.

October 17, 2013: NSEL’s former MD and CEO Anjani Sinha arrested.

October 31, 2013: Jignesh Shah resigns as Chairman of MCX.

December 17, 2013: Regulator FMC declares Jignesh Shah and FTIL as unfit to run any exchanges and orderd FTIL to reduce its stake in MCX from 26 percent to 2 percent.

December 20, 2013: FTIL moves high court against the FMC order.

March 13, 2014: CBI files case against NSEL, questions Jignesh Shah for the whole day.

May 7, 2014: Mumbai Police arrests Jignesh Shah. He is charged with criminal misappropriation and conspiracy, and also with deceiving investors under the MPID Act.

August 22, 2014: After three months in jail, Bombay High Court grants bail to Jignesh Shah on condition that he will submit two sureties worth Rs 5 lakh each within two weeks. According to a ToI report, the court rapped the investors too. “The persons whose money was lost are apparently not genuine traders for whom NSEL was supposed to provide a platform,” the court has been quoted as saying in the report.

With inputs from PTI