Mumbai court sends Jignesh Shah, Shreekant Javalgekar to judicial custody till May 31

A Mumbai court has sent Jignesh Shah, the 46-year-old promoter of Blackstone-backed Financial Technologies India Ltd (FTIL) and MCX, along with Shreekant Javalgekar, former MD and CEO of MCX, to judicial custody till May 31, pertaining to their alleged involvement in the National Spot Exchange (NSEL) scam.

The public prosecutor stated that the police needs time to carry on interrogation as Shah is not answering many questions. Shah and Javalgekar were arrested by the economic offences wing of Mumbai police on May 7 on charges of criminal conspiracy.

The court said it will hear a bail plea for Shah and Javalgekar on May 22.

The police is questioning Shah and Javalgekar on the Indian Bullion Market Association (IBMA) transactions made on NSEL as it was found that IBMA made losses on NSEL, but due to income from MCX those losses were squared off and converted into profits.

The arrests followed complaints filed by NSEL investors. NSEL was hit by a RS 5,600 crore payment crisis last year even though it faced a show cause notice two years ago on allegations that the spread contracts it ran violated forward contract law.

Over the last few months, FTIL as a group came under the scanner of various regulatory bodies, including securities market regulator SEBI and Forward Markets Commission (FMC). Both FTIL as a company and Shah as an individual were deemed to be unfit to run any exchange in the country.

They have been previously asked to cut their holding in MCX, a listed commodity exchange operator, from 26 per cent to 2 per cent. The proposed share sale, which was to be completed sometime back, is pending.

FTIL counts Blackstone, Norwegian sovereign wealth fund Government Pension Fund Global and Citigroup Venture Capital International as shareholders. MCX has shareholders such as Intel Capital and Blackstone.

Blackstone owns 7 per cent in FTIL besides 4.8 per cent in MCX.

(Edited by Joby Puthuparampil Johnson)

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