FMC’s unfairness towardsFTIL-NSEL merger

• Unreasonable FMC

• Partiality of FMC towards Defaulters

• Prejudicial treatment to NSEL by FMC

• NSEL rejoinders to FMC

• Conclusion

Unreasonable FMC• FMC has being continuously showing bias towards FTIL-NSEL

merger, leaving other players untouched

• There is a good scope for exploring options & alternatives for crisis resolution involving cooperation of various agencies instead of implicating only FTIL

• The crisis was solvable, but was blown out of proportion by action of FMC, which focused on disciplinary action first even prior to an investigation

• NSEL crisis was treated differently than any other previous crisis in the financial sector

• It seems like FMC is deliberately attempting to malign & destroy the group

Partiality of FMC towards Defaulters

• FMC has not disclosed what transpired in their one on one discussion with defaulting members on Aug 11, 2013

• FMC has done nothing to undertake a forensic audit of defaulting members to know trail of funds

• FMC has not complained to EOW, CBI or ED against any defaulters or proceed to court against defaulters

• FMC has not been meeting NSEL board as frequently as they have been meeting brokers & trading clients

Prejudicial treatment to NSEL by FMC• FMC has only acted against NSEL & NSEL Board, FTIL &

its promoters

• NSEL crisis has been treated & dealt with differently than any other previous crisis in the financial sector leading to a suspicion of a deliberate attempt to malign & destroy the group

• FMC has been changing his stands in NSEL matters even before the crisis erupted

• NSEL had a valid & legal business model. There was no

omission or commission on part of NSEL board

• In July 2013 FMC replied to the government that exemption in 2007 was general. Therefore where did the question of illegality arise to suspend trading at NSEL?

Comments of Chairman FMC

NSEL Response

NSEL has little capital to pursue recovery of funds from defaulters

 NSEL is fully supported by FTIL & has spend huge amounts in recovery suits in the High Court as well administrative expenses

NSEL has few staff NSEL has adequate staff for legal & recovery issues

NSEL has no capacity to recover NSEL has capacity to recover money & is doing everything possible

NSEL has no money to pay legal expenses

NSEL is well supported by FTIL for contesting legal cases

Holding company should step in to pursue recovery

 Instead of pursuing FTIL-NSEL merger, FMC should support NSEL to expedite recovery process

FMC does not have power to regulate NSEL

DCA wrote a letter to FMC on 5th Aug 2011 giving power to oversee NSEL for investor protection & also seek information as designated agency & do the needful

NSEL has been asking FTIL for funds, we were told in meetings, but they were not getting help

 NSEL has been getting prompt help to meet all court, legal &administrative expenses from FTIL

NSEL rejoinders to FMC

Conclusion• Investigation by EOW has revealed that the entire

outstanding of clients are with 22 defaulters

• Instead of merging NSEL with FTIL the real solution lies in trading clients, brokers & government agencies joining forces with NSEL to ensure recovery

• 85% of monies are only with 7 defaulters

• Regulatory institutions should instead extend their support & should have maybe even provide temporary liquidity to overcome this crisis

Thank You