The MPID (Maharashtra Protection of Interest of Depositors) Court has ruled that stockbrokers implicated in the NSEL payment crisis qualify as deposit-taking financial establishments under the MPID Act. This decision, based on Sections 2(c) and 2(d) of the Act, applies to the funds received from both investors and brokers. Among the 16 brokers identified by the MPID Court are Motilal Oswal Commodities Brokers, Philip Commodities India, Nirmal Bang Commodities, Suresh Rathi Commodities, JM Financial Commtrade, Systematix Commodities Services, KR Choksey Commodity Brokers, and Roongta Comtrade. These brokers were found to have accepted funds from investors but failed to reimburse them as required.
This ruling enables the State Government to seize the assets of brokers designated as financial establishments by the MPID Court.
In response to 11 charge sheets filed by the Economic Offences Wing (EoW) of the Mumbai Police on April 18, the MPID Court summoned 16 brokers, along with 49 of their directors and entities.
Furthermore, the Court has directed these entities to provide a cash bond of ₹50,000 and has prohibited them from leaving the country without informing the Court.
The EoW has charged these brokers with misrepresentation, alleging that they misled their clients with false or misleading statements, enticing them to invest in NSEL products. The Court noted that the brokers assured their clients of risk-free returns and used various means, including presentations, marketing materials, brochures, and verbal assurances, to induce them to trade on NSEL by offering these risk-free returns.