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Jignesh Shah – The Rise and Fall of an Ambitious Entrepreneur
Excerpts
MCX AND NSEL INCORPORATED
Shah launched MCX in 2003. In 2005, NSEL was incorporated under the Companies Act, 1956. Shah worked passionately to fulfill his childhood ambition of becoming a billionaire. Being focused on his vision, he consistently developed his political clout over the years. In 2007, NSEL signed a memorandum of Understanding (MoU) with the Government of Madhya Pradesh, a state in Central India, toward developing electronic market facilities in the state. NSEL had the strong backing of the Government of India, which exempted it from all regulatory control. The Ministry of Consumer Affairs, Government of India, issued a Gazette Notification under Section 27 of the Forward Contracts Regulation Act (FCRA), 1952, exempting FTIL from the restrictions of FCRA regulations. NSEL thus enjoyed unprecedented privileges in terms of its functioning and modus operandi. It was allowed to function freely, with little accountability or answerability.... |
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THE INFLUENTIAL SHAH
Shah exercised enormous influence on the government and was close to powerful political leaders. He was said to have roped in political and industrial bigwigs to clear the way for his establishing MCX. He was reportedly favored by topnotch industrialists and politicians during that time . His parent company, FTIL, had garnered money from top industrialists...
THE INITIAL FISSURES
The initial fissures started surfacing in 2009 when MCX was accused of taking undue advantage of weak legal foundations and a weak regulator. The legal framework of FMC, which was drafted in 1952, had suffered from obsolescence...
THE NSEL SCAM
Shah’s tentacles spread overseas too. He launched trading exchanges in six countries, which included a gold exchange in Dubai...
WHAT ACTUALLY TOOK PLACE
Investigations revealed that instead of facilitating T+2 transactions , which was NSEL’s entitled scope of trade, the spot exchange had initiated multiple contracts...
THE BLAME GAME
The blame game then began. Shah pretended to be unaware of the loopholes in NSEL and MCX. In a dramatic turn of events, Sinha made an out-of-turn confession stating he was responsible for all the objectionable affairs at the beleaguered exchange...
THE CRACKDOWN
On October 31, 2013, Shah was compelled to resign as non-executive vice-chairman of MCX after FMC issued a notice to him and to FTIL...
EXHIBITS
Exhibit I: List of Traded Commodities
