The Central Bureau of Investigation (CBI) has decided to close a case against C.B. Bhave, former chairman of the Securities and Exchange Board of India (Sebi) , and another former member in connection with grant of sanction to MCX-SX to function as a full-fledged private stock exchange, according to sources.
The agency may recommend departmental action against some officials. The CBI was prompted to file a closure in the case after concluding that Bhave's role in granting permission to the private exchange did not warrant registering a case, sources added.
The CBI has finalised the case, in which departmental action may be 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 Sebi officials for alleged concealing of facts and conspiring to cheat the investors.
Shah is already under scanner of other probe agencies like the Enforcement Directorate since last year when National Spot Exchange Limited (NSEL) - part of the Financial Technologies (India) Limited (FTIL) Group, founded by him-faced a payment crisis as nearly 18,000 of its investors allegedly lost millions of rupees.
Bhave, a 1975 batch IAS officer of the Maharashtra cadre, 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 the NSEL crisis.
The CBI move to investigate the complete process of regularisation of Shah's exchange included examining of current Sebi chairman U.K. Sinha as well. The CBI was also trying to ascertain whether there was any undue pecuniary benefit to Shah.
It 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.
The charges were rejected by the ministry as also Sebi. MCX-SX was 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 rules.