New Delhi: The CBI has decided to close a case against former SEBI chairman C B Bhave and another ex-member in connection with grant of sanction to MCX-SX to function as a full-fledged private stock exchange but recommended “departmental action” against him.
This follows the agency coming to a conclusion that Bhave's role in granting permission to the private exchange was not of serious nature to warrant registering a case, highly-placed sources said.
Hence the recommendation for a departmental action against Bhave, a 1975 batch IAS officer of Maharashtra cadre, who took voluntary retirement from service in 1996.
The sources said that the CBI has finalised the case in which similar action is being recommended to the Finance Ministry against former SEBI member K M Abraham.
Besides this, the CBI has decided to file a regular case against Jignesh Shah and some unknown officials of the Securities and Exchange Board of India (SEBI) for alleged concealing of facts and conspiring to cheat the investors.
Shah is already under the scanner of EOW and other probe agencies like ED since last year when National Spot Exchange Ltd (NSEL), part of the Financial Technologies (India) Limited group founded by him, faced a payment crisis as nearly 18,000 of its investors allegedly lost millions of rupees.
The size of the scam has been pegged at Rs 5,600 crore.
Bhave, a 1975 batch IAS officer of Maharashtra cadre, was not available for comments.
He became SEBI Chairman in February 2008 and his three- year term ended in February 2011. Abraham's term as a whole- time member of SEBI also ended in 2011.
MCX-SX was set up by FTIL and its commodity exchange arm MCX and began functioning as a full-fledged stock exchange last year after a prolonged battle with SEBI.
The exchange was initially granted permission for only a limited segment of currency derivatives in 2008, on the condition that its licence would require approval every year.
Last year, SEBI asked MCX-SX to restructure its board and governance structure after a payment crisis broke out at NSEL.
The CBI move to investigate the complete process of regularisation of Shah's exchange included examining of present chairman of SEBI U K Sinha as well, the sources said.
Bhave had denied any quid pro quo as alleged by CBI for grant of permission to the bourse and had said “there was not a single question to me on quid pro quo. They wanted to understand the public interest involved in granting the licence to MCX-SX to trade in currency derivatives”.
The CBI was also trying to ascertain whether there was any undue pecuniary benefit to Jignesh Shah entities as a result of this decision.
The agency was probing the extensions given in 2009 and 2010.
Abraham had written in 2011 to the then Prime Minister Manmohan Singh's Office that SEBI was being pressured by the Finance Ministry to go easy on some corporates, including MCX and Sahara, against whom he had passed orders. However, these charges were rejected by the Finance Ministry as also SEBI.
MCX-SX was initially given licence to operate in a limited segment of currency derivatives in 2008, but SEBI refused permission to allow it to act as a full-fledged bourse for years as it was not found to be in compliance with existing regulations for the same.
It was Abraham's order in September 2010 that rejected MCX-SX application for a full-fledged exchange, saying it was not in compliance with shareholding regulations and it was not a ‘fit and proper' entity for such a business.
MCX-SX could launch services as a full-fledged bourse only last year after it met all the necessary regulations and conditions imposed by SEBI.