If you have been assigned a responsibility of protecting the interest of investors, then you should never forget your priority. Unfortunately, Forward Markets Commission, a commodity market regulator did its job very miserably. In fact, it’s shocking that being a regulator it was unaware of its own policies. But, then again, it happens only in India!
I feel terribly sad for NSEL! Reading a book which is an unofficial biography of Jignesh Shah called ‘The Target Book‘ written by ShantanuGuha Ray! Let me tell you what exactly happened before the bomb burst on NSEL.
On July 12, 2013, The Department of Consumer Affairs writes to NSEL asking it to stop further or fresh contracts.
For NSEL, it was something that was out of the blue because as far as they know, they have meticulously followed all the procedures regulated by the FMC. However, as an exchange, it informs all the necessary stakeholders that from July 31, 2013 – NSEL will roll its curtains down. But I can actually feel the shock and uncertainty in Jignesh Shah’s mind like as if it happened yesterday.
Now, what’s the tragedy and what’s FMC’s role in the massive comedy of errors?
– First, the FMC believed that NSEL violated the rules under Section 27 of the Forward Contract Regulation Act. Therefore, it sent its recommendation to the Consumer Affairs Ministry that NSEL should shut shop.
Wait! But, that’s not all!
Exactly a week later, FMC shoots another letter to the Consumer Affairs Ministry claiming that the notification was silent on whether the exemption is applicable to all or specific provisions of FCR Act! Come on!
A regulator’s job is to ensure that investors do not lose money. But, if it are unclear about its own regulation, what could be a bigger bad example for playing with the lives of all those investors who put in their hard earned money into NSEL believing in Jignesh Shah.
Can you imagine the colossal and irreversible damage that NSEL had to suffer! Hats off to Jignesh Shah for trying to keep his empire afloat especially when there are sharks waiting to take out pieces of him.
I am outraged on behalf of Jignesh Shah! I loved the book ‘The Target’ and believe it is a must-read for all those who have followed the NSEL case.