CBI today carried out searches at nine locations, including the office of commodity bourse MCX and Jignesh Shah promoted FTIL, in connection with a case related to granting license to MCX-SX to operate as a private stock exchange in alleged violation of law.
The searches were spread across the offices of MCX, MCX-SX (now known as Metropolitan Stock Exchange of India Limited) and erstwhile FTIL, sources said.
The agency had registered a case in 2014 against FTIL promoter Shah, MCX and FTIL among others for allegedly violating law to get extension to MCX-SX to function as a private stock exchange. MCX-SX started operations in 2013.
The sources said agency had carried out searches after some inputs about material which could act as evidence in the case. They refused to give any further details as the search operation is still going on.
Meanwhile, 63 moons (formerly known as FTIL), said in a statement, “pursuant to the applicable regulations of SEBI (LODR), Regulations 2015, please be informed that Central Bureau of Investigation, Economic Offence Wing, Mumbai, is conducting search in connection with FIR…relating to recognition granted by SEBI to MCX-SX (now Metropolitan Stock Exchange of India Limited).”
MCX also gave a statement on BSE, saying the CBI search is going on in respect of recognition granted by SEBI to Metropolitan Stock Exchange of India Limited (formerly known as MCX Stock Exchange Limited) for starting its stock exchange in trading in currency and other segments in respect of case. no. RC 9/E/2014″.
CBI had filed the FIR in the case against under IPC Sections related to criminal conspiracy and cheating besides provisions of Prevention of Corruption for alleged abuse of official position.
The agency had alleged that the promoters of MCX-SX had entered into a buy back arrangement with a nationalised bank in violation of Securities Contract Regulation Act, 1956 and Securities Contract (Regulation) (Manner of Increasing and Maintaining Public Shareholdings in Recognised Stock Exchanges) Regulation, 2006.
CBI had said in its FIR that the accused allegedly in connivance with SEBI officials, deliberately suppressed this material fact while applying for extension of recognition of the Stock Exchange, to conduct trade in currency derivatives, and, fraudulently obtained the extension of recognition of the exchange in the year 2009 by cheating SEBI.
The agency further alleged that SEBI officials deliberately did not issue notice to the stock exchange for cancellation of its recognition in the currency derivatives, when SEBI had already rejected request of the same stock exchange for trading in other segments.
MCX-SX was initially given licence to operate in a limited segment of currency derivatives in 2008, but SEBI had refused permission to allow it to act as a full-fledged bourse for years as it was not found to be in compliance with existing regulations for the same.
A senior SEBI official in September 2010 had rejected MCX-SX application for a full-fledged exchange, saying it was not in compliance with shareholding regulations and it was not a ‘fit and proper’ entity for such a business.
MCX-SX could launch services as a full-fledged bourse only in 2013 after it met all the necessary regulations and conditions imposed by SEBI.