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The Economic Offences Wing (EOW) of Mumbai police, investigating the Rs 5,600-crore National Spot Exchange (NSEL) payment scam, has sought legal opinion on whether it can attach the assets of non-defaulting brokers who engaged in trading of illegal paired contracts for clients and earned brokerage from them, said people aware of the development.
EOW is verifying whether it can attach, under the Maharashtra Protection of Interest of Depositors (in financial establishments) Act, 1999 (MPID Act), brokers’ assets whose value corresponds to the brokerage earned from trading on NSEL.
The agency has sought details of, among other things, brokerage earned by 300 non-defaulting brokers.
It estimates around 150 brokers engaged in illegal paired contracts’ trading on behalf of investors on NSEL.
“We have sought legal opinion on attachment of brokers’ assets to the extent of brokerage earned through trading of illegal paired contracts under the MPID Act,” said a police source.
He added that brokers had represented to the EOW that they could not be considered as financial establishments under the MPID Act as they had not accepted deposits from investors.
The counterparties on NSEL were 24 (now 22) members who had defaulted on settling obligations to 13,000 investors in July 2013.
