These brokers were apparently working as Carrying and Forward (C&F) agents as well for National Spot Exchange Ltd (NSEL) without checking the veracity of commodities lying in the warehouses, and kept investors in the dark about non-availability of commodities on which their clients were taking positions.
Margin funding is when brokers arrange to finance investors' purchases and charge money for such loans.
According to sources, various regulators including Sebi and FMC are looking into the role of these brokers, who were registered in both stocks and commodities markets.
Among the 32 brokers, 14 are from Gujarat, seven from Rajasthan and others are from states like Maharashtra, Delhi, Andhra Pradesh and Punjab.
These brokers, with a large outstanding on NSEL, were charging Rs 25 per lakh of transaction from their clients.
The regulators have received complaints that margin funding happened with the broking firms and their associates financing 80-90 per cent of exposure on NSEL, while balance was paid by high networth clients (HNIs), sources said.
The brokers were apparently charging Rs 100 per lakh as brokerage and additional commission for providing margin funding.
These stock brokers have come under regulatory scanner for inducing HNIs and other investors to trade on the spot market commodity exchange with promise of high returns.
They allegedly mis-sold the commodities forward contracts on NSEL to to their investors as lucrative investment products garnering fully secure returns of up to 18 per cent under portfolio management services.
The spot commodity bourse, promoted by Jignesh Shah-led Financial Technologies (FTIL), has been facing problems in settling Rs 5,600 crore dues of 148 member brokers, representing 13,000 investor clients, after it suspended trading on July 31 after government directions.
NSEL has so far settled about Rs 244 crore against about Rs 5,600 crore dues to 13,000 investors.
Earlier this week, police had attached properties of Shah, also a Director of NSEL and three others.
Besides Shah, properties of Joseph Massey, also a Director at the now defunct spot Exchange, and two others were attached by Mumbai Police's Economic Offences Wing (EOW) which is investigating the scam that came to light in late July.