Enforcement Directorate Raids Mumbai and Chennai Firms in Unlisted NSE Shares Fraud

The Enforcement Directorate (ED) has launched a significant operation in Mumbai and Chennai, targeting a money laundering probe involving the alleged sale of unlisted shares of NSE India Ltd. The searches, conducted on February 27, were carried out at eight locations under the provisions of the Prevention of Money Laundering Act (PMLA).

The action was primarily aimed at entities such as Atum Capital Pvt Ltd, Optimus Financial Solutions Pvt Ltd, Babli Investment Pvt Ltd, and Supremus Angel, along with their directors. Key individuals named in the probe include Satish Kumar, Sanjay Damani, Neeraj Nisar, Krish Vohra, Manish Soni, and Nisha Kumari. The ED alleges that these individuals were part of a cartel that duped investors by promising allocations in unlisted shares of the exchange operator.

According to the ED, the accused lured investors by claiming they owned shares of NSE India Ltd and could transfer them at a premium through private share purchase agreements. However, investigators found that the group did not actually possess the shares they were offering. Since the shares of NSE India Ltd are not listed on any stock exchange, their trading does not take place through platforms like the NSE or BSE and is not governed by exchange settlement mechanisms.

The lack of formal oversight in private transactions was exploited by the accused to collect large sums from investors as advance payments. During the searches, officials seized documents related to properties, digital records, and other material that the agency described as incriminating. The ED has since frozen several bank and demat accounts linked to Satish Kumar, Sanjay Damani, and the entities under investigation, invoking powers under Section 17(1A) of the PMLA. Evidence of 'proceeds of crime' was detected in these accounts.

Complaints from investors across multiple states have surfaced in connection with the alleged scheme, although in some cases, local law enforcement agencies are yet to register formal FIRs. The investigation is ongoing. The alleged fraud comes at a time when interest in shares of NSE India Ltd has been building in the private market ahead of a potential public listing.

In an interview with CNBC-TV18 on January 31, Ashish Chauhan, the MD and CEO of NSE, said the exchange had received a no-objection certificate from the Securities and Exchange Board of India (SEBI) for its proposed initial public offering (IPO) and was preparing the draft red herring prospectus. Chauhan stated that drafting the filing could take three to four months, with regulatory review by the market regulator taking another two to three months. The overall timeline for the IPO is estimated at around seven to eight months, with the exchange targeting the end of the year for the listing.

Market participants say the prospect of a long-awaited IPO has fueled demand for the exchange’s shares in the unlisted market, a space where transactions occur privately between buyers and sellers rather than through regulated exchanges. Investigators warn that such demand can create opportunities for fraudulent intermediaries to misrepresent ownership of shares. Investors are advised to verify the seller’s actual ownership through demat records and ensure transfers are executed through recognized depository systems.

Further investigation into the case is in progress, the ED said.