NSEL Investors’ Action Group, a breakaway faction of NSEL Investors’ Forum, has petitioned the Mumbai police for conducting a forensic audit of brokers of the National Spot Exchange Ltd in the case of the 55-bln-rupee payment defaults on the exchange.

“In a criminal breach of trust, brokers gave away investors’ money without securing the investor in return by collecting negotiable documents like warehouse receipt or delivery order,” the group said in a four-page complaint to the joint commissioner of police.

The investor group has alleged that there was a nexus between some brokers and the the National Spot Exchange and its defaulter borrowers in running a ponzi scheme under the garb of arbitrage trade.

The group also alleged that some big brokers made bulk purchases without client orders and confirmations, and regularly misused the window of changing client codes, a facility allowed by regulators in case of a genuine punching mistake.

The group further alleged that some brokers had collected sales tax, brokerage and transaction and delivery charges for stocks which never existed or were inadequate.

The group also alleged that some brokers compelled investors to invest in National Spot Exchange’s pair trades by financing them to the extent of 90% at lower interest rates through their own non-banking finance companies. -Cogencis