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Financial Tech chairman Jignesh Shah arrested in fraud probe
May 7, 2014 / 4:03 PM / 4 years ago

Financial Tech chairman Jignesh Shah arrested in fraud probe

MUMBAI (Reuters) - The chairman of Financial Technologies (India) Ltd, Jignesh Shah, was arrested on Wednesday as part of an investigation of fraud at a commodity exchange owned by the bourse operator, a Mumbai police official said.

Multi Commodity Exchange (MCX) Managing Director Jignesh Shah (L) speaks with New York Stock Exchange (NYSE) Euronext President Catherine Kinney during a news conference in Mumbai February 15, 2008. REUTERS/Punit Paranjpe/Files

Shah has been under police investigation since August after National Spot Exchange Ltd (NSEL), the commodities exchange owned by Financial Technologies, abruptly suspended trade in most of its commodities contracts on July 31.

Investigations by commodities regulator the Forward Markets Commission showed what it said was a 55 billion rupee ($916 million) fraud, as the exchange defaulted on obligations to market participants because it did not have enough collateral.

Rajvardhan Sinha, additional commissioner in the Mumbai police unit that investigates white collar crime, said Shah had run “a criminal conspiracy with other accused who were running this exchange”, referring to NSEL.

A Financial Technologies spokeswoman said the company was working on a statement regarding the matter.

Financial Technologies and Shah have previously denied knowledge of any fraudulent activity at NSEL, which ceased operations in August.

Shah’s arrest is the latest blow to Financial Technologies, which also sells trading software.

The company was ordered by the market regulator in March to cut its stake in a separate commodities exchange, Multi-Commodity Exchange of India Ltd (MCX), from 26 percent to 2 percent.

The commodities regulator had ruled that MCX was not “fit and proper” to run a bourse.

Financial Technologies subsequently announced it would sell the 24 percent MCX stake, although it has not yet completed the sale.

Writing by Rafael Nam; editing by Tony Munroe and Tom Pfeiffer

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