Taking note of SEBI’s latest order ruling Motilal Oswal and IIFL’s commodity arms’ as not fit and proper, Jignesh Shah, founder of the now defunct NSEL said that he had to exit business in all exchanges after SEBI’s ruling, which has not been in case of brokerages. “Once it was declared that it’s not fit and proper in one segment, it was naturally extended to other segments, without going into merits,” he said in an interview to CNBC TV18.
It’s a separate company, but its still in the broking business. If you look at the business, their advertising would be ABC group, equity commodity, currency, bonds. If your reputation has been hampered in one company, will you be able to conduct business in other company, but same business. I think this is a bit far-fetched. This is the position taken by the brokers. I think that it is SEBI’s area, and they cannot self-pronounce and say on behalf of SEBI.
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Earlier, following the order, IIFL group founder Nirmal Jain said that the order is restricted to the group’s commodity arm IICL, and will not have any impact on the other businesses of the group. “The Commodity business contributes to less than 0.2% of the total company’s profit,” Nirmal Jain said in an interview to CNBC TV18. There are no unlawful gains mentioned in the SEBI order, and nothing specifically mentioned about the IIFL group, he added. Jain further clarified that IIFL’s loan against shares are minimal. The SEBI order puts an end to uncertainty with respect to developments over the NSEL issue.
Stock market regulator Sebi has ruled that Motilal Oswal Commodities Broker and India Infoline Commodities are not “fit and proper” to act as commodity derivative brokers in connection with the Rs 5,600-crore scam at the NSEL. Noting that reputation is an important factor for consideration of “fit and proper” criteria, Sebi said the reputation of the two entities have been seriously eroded, PTI reported. The rulings have come against the backdrop of the payment scam at the National Spot Exchange (NSEL) that came to light in 2013; and subsequently, many entities, including brokers, have come under the scanner of Sebi and other probe agencies.
