FMC staff behind MCX founder’s100 crore gain: STAR INDIA Market Research

The Central Bureau of Investigation has alleged that officials of the erstwhile Forward Markets Commission colluded with Jignesh Shah, former MD of MCXBSE -1.44 %, and the commodity exchange’s then founder Financial TechnologiesBSE -1.76 % to facilitate windfall gains in excess of Rs 100 crore to the bourse’s anchor investor. 

The gains came after the Forward Markets Commission (FMC) allowed FTIL to dilute equity in excess of the prescribed limit in MCX during its listing on the stock exchanges in March 2012 six months beyond the deadline set by the government for stake dilution. 

The CBI cites this as one example of how former FMC officials allegedly gave “illegal benefits” to MCX to enable it to function as a national multi commodity exchange (NMCE) since 2003 despite the bourse not fulfilling the government criteria.

Consumer affairs ministry guidelines for the equity structure of commodity exchanges (commexes) that had completed five years of operations by July 2009 required anchor investors to lower their stakes to 26 per cent FTIL, which then held 31.18 per cent in MCX, was obliged to bring its excess stake down by 5.18 per cent to 26 per cent by Sept 30, 2010, or latest by Sept 30, 2011, in “exceptional cases on genuine grounds”.

“The officials of FMC fraudulently accepted the false claim of M/s FTIL and Jignesh Shah that IPO was the only way of diluting the equity to 26 per cent to comply with clause 3.3 of the guidelines even though the other shareholders of MCX, namely EdelweissBSE -0.12 % Capital and FID Funds (Mauritius), sold their shares at Rs 612 and Rs 500 per share, respectively, during 26.03.2010 to 31.03.2010 and 07.05.2010 to 14.05.2010. The FMC officials had not taken any steps for cancellation of registrat .. 

CBI said in its FIR that the windfall arose by the promoters selling their excess stake (26.41 lakh shares) at Rs 1,032 apiece in March 2012 during the IPO against Rs 612 per share in March 2010.

A spokesperson of 63 Moons (formerly, FTIL) said: “A parallel cannot be drawn for offloading of MCX shares between private equity (PE) firms and promoter of an exchange. PE firms such as Edelweiss Capital and FID Funds (Mauritius) sold the MCX shares of face value of Rs 5 each, while FTIL had sold MCX shares at face value of Rs 10. So the comparison and calculation itself is absolutely wrong and is a convenient creation of CBI.”

The spokesperson added: “…There was full process of compliance in case of an IPO which rests in the hands of Sebi and merchant bankers and not in the hands of FTIL and the FMC….. A bank that had invested Rs 21 crore reaped Rs 2,100 crore in the IPO.” 

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