Dear Shri Thomas and other FMC officers involved with NSEL settlement
I
am a Mumbai based investor and have invested more than half of my
life's earning / tax-paid capital in NSEL. This product was offered to
me by my brokers (Motilal Oswal and Philip Capital) as a legitimate
arbitrage income product (On which I again paid tax). Before investing
my money I checked out the website of NSEL which claimed the exchange
being jointly promoted by FT and NAFED (an organization under ministry
of Agriculture , GOI) which generated enough confidence in me to invest.
I am sure your ministry was aware of this claim of NAFED being a
co-promoter. I was also told it is a govt. recognized exchange and it
offers counter party guarantee, there were also a host of govt.
companies shown as using this platform.( http://www. nationalspotexchange.com/% 5CNSELuploads% 5CResourceCentre%5CNSEL_ Presentation.pdf)
I now learn that about a year back GOI had problems
with products/business model being offered by NSEL. I wonder why it was
allowed to function in the first place if the shortcomings were already
known to your ministry even back then. Also it is amusing that the issue
of regulation and governance of a public commodity exchange of India
NSEL was being passed between ministries like a shuttlecock.
When the shit hit the fan on 31st July we were
jolted to learn the suspension of trading and merging of settlement
cycles. Mr. Anjani Sinha claimed that there was a Settlement Guarantee
Fund of Rs.850 crores plus there was extra 'margin' and there was no
problem at all. The FMC also gave a statement on 2nd August that there
is no 'immediate risk of NSEL default'. http://in.reuters. com/article/2013/08/02/india- nsel-regulator-ftil- idINDEE97102R20130802 .
On 3rd August there was a meeting at Trident Mumbai
between NSEL, FMC and borrowers where some borrowers claimed that they
had no problem paying (about 40% of borrowers) and rest of them could
pay in installments. On 5th August Mr. Jignesh Shah came on TV and gave
commitment that there will be a financial closure and investors will be
fully paid in 5 months (claiming a majority of borrowers were even
ready to pay upfront) .The delay he promised would be remunerated by 16%
interest (incentive to pay early) . A committee of 4 including Mr
Sharad Upasani, Justice Kochar,Mr Bajpai, IPS Mr Sivanandan was
announced which would oversee the settlement and strict action would be
taken against those who don't pay. You can view these jokes here http://www.youtube.com/ watch?v=xPR3Clw5IFs http:// www.youtube.com/watch?v= PCn3qkv-4oE http://www. youtube.com/watch?v= OL7BK5J5grg and laugh today. (Mr. Sivanandan's experience from police will come very strongly ,we will see no one dare not pay!! )
After a long wait and much heartburn on 14th August
NSEL finally announced a protracted payout calendar where 39-40% upfront
promised payment surprisingly vanished and smaller tranches were
assured. They (NSEL) also thanked FMC and GOI for 'support' in their
press release. On the promised payout day of 20th August , NSEL
shamefully defaulted on the very first tranche cocking a snook at FMC ,
Investors and also GOI.
On 20th August the board of NSEL was sacked by
management as a part of 'disciplinary action' and Mr. P.R. Ramesh was
appointed as 'OSD'. This was another whitewash (like appointing that
committee of 4) as Mr. P.R. Ramesh is known to be a Jignesh henchman. On
21st August the investors got only half the money promised and perhaps
first time in the history of free India a government recognized and
regulated exchanged defaulted. Some key questions that every investor in NSEL wants to know are:
1) Why was NSEL permitted to function when MCA/FMC were aware of its shortcomings
2)
What sort of mickey mouse exchange was being licenced to run with about
15000 investors on one side of the exchange and a twenty odd looters on
the other?
3) Why FMC consented to financial closure in early August without ensuring the wherewithal of NSEL /Borrowers to do so
4)
Even after knowing fully well that NSEL management/promoters have been
inveterate liars (confirmed by FMC in various circulars) and suspecting
that books are being cooked why is the exchange not being taken over by
FMC/GOI?
5) What happened to that Settlement Guarantee Fund?
6)
Why is this letter game being played by NSEL charlatans and FMC babus ?
This is costing us investors dear. please don;t mock us investors with
this facetious game as some of us might be driven to suicide in despair.
7) Why haven't you/FMC frozen/seized assets of borrowers who have not been paying?
8)
Why the delay in verifying stocks in warehouses? Why the stock or
whatever was lying in exchange warehouse was not auctioned in these 20
days?
9) Above all Why Shankar Guru (after Giving 1000 odd crores to
his son-in-law of NK Proteins) and Jignesh Shah (after criminally
hoodwinking all of us) are free men?
The action plan I humbly suggest :
a) Immediately take over functioning of NSEL, rather
than directing NSEL to do things your way (which they don't listen to)
why not you do it your way!
b) Sell present stocks and generate whatever money it can to distribute quickly among investors
c) Go after Jignesh and his crooked associates hammer and tongs,
seize their assets, immediately take over MCX, FT and merge it all with
NSEL (from revenues most of the NSEL deficit can be made up)
d)
Arrest all the dodgy borrowers along with their facilitators in NSEL
for criminal conspiracy to defraud gullible investors of India and
falsifying records (Jignesh has himself on record stated now that he
doubts quality and quantity of stocks). Lift the corporate veil and
seize all the personal assets of promoters under criminal proceedings.
e) Check the money trail, involve finance ministry/ IT /ED /SEBI and find out if the money has gone out of the country.
f)
Do not let Jignesh Shah distance himself from NSEL and allow him pin it
all on the management. It is an insult to our intelligence (and yours)
if we are forced to believe that a paid manager can siphon thousands of
crores without the knowledge of promoters/bosses.
Please stop taking this issue lightly and go after
the crooks all guns blazing. Enough is enough as not only our lives but
the reputation of India and Indian markets/bourses will depend on your
actions in coming days.
All the very best.
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