Controversial businessman Jignesh Shah, the founder of Financial Technologies India ltd (FTIl) and the mastermind in the Rs 5,600-crore National Spot Exchange (NSEl) scam, was arrested by the CBI on Tuesday, in connection with a case relating to the grant of Securities and Exchange Board of India (SEBI) licence to a private stock exchange MCX-SX promoted by him.
Shah's arrest followed searches that the CBI conducted simultaneously during the day at nine places, including the residences and offices of two private companies promoted by him in connection.
Shah, who is currently the Chairman Emeritus of 63 Moons and is working with several technology firms for start ups, will be produced before a special CBI court here on Wednesday.
Without naming Shah, the CBI confirmed the arrest and raids it had conducted during the day. "The CBI today arrested a promoter of two private companies and conducted searches at 9 places in Mumbai, including the residence and office premises of said Promoter of Mumbai-based two private companies, then Executive Director, SEBI and others in an on-going investigation of a case," a CBI spokesperson said.
"Incriminating documents, including transfer of shares by private companies, FDR, purchase of assets etc., recovered during searches are being scrutinized for further investigation," the spokesperson said.
Confirming the raids conducted on its premi9ses, even 63 Moons (formerly FTIl) said: "Pursuant to the applicable Regulations of SEBI (listing Obligations and Disclosure Requirements), Regulations 2015, please be informed that Central Bureau of Investigation, Economic Offence Wing, Mumbai, is conducting search in connection with an FIR relating to recognition granted by the SEBI to MCX-SX (now Metropolitan Stock Exchange of India ltd)".
The CBI has registered a case under sections 120b (conspiracy) and 420 (cheating) of IPC against Shah, his private stock exchange MCX-SX, four then SEBI officials and others on the allegations of connivance of the SEBI officials with MCX-SX in fraudulently allowing renewal of recognition for it to conduct trade in currency derivatives in 2009-2010.
According to the CBI, MCX-SX had "dishonestly" entered into a buyback arrangement with some financial institutions in violation of the Securities Contract Regulation Act, 1956 and other rules & regulations and deliberately suppressed this material fact while applying for extension of its recognition to operate in currency derivative.
The SEBI allegedly rejected the request of MCX-SX for trading in other segments in 2010, but renewed the registration granted to the company/stock exchange in question even though it was not compliant to SEBI MIMPS' regulations.
MCX-SX, it may be recalled, first started operations in 2008 with its currency derivatives segment.
Tuesday's was third occasion when Shah was arrested in connection with differe3nt scams.
Shah was first arrested by the Economic Offences Wing (EOW) of the Mumbai Police in the NSE payment scam and released on bail in August 2014.
In July 2016 was arrested by the Enforcement Directorate (ED) after being booked under 10 of the Prevention of Money laundering Act (PMlA)and later released on bail. The NSEl scam, relating to a Rs 5,600 crore Ponzi scheme, broke after the National Spot Exchange failed to pay its investors in commodity pair contracts after July 31, 2013.