ED issues show-cause notice to nine entities for FEMA violation
by IANS | Updated Jun 18, 2020
Most of the firms are based out of Kolkata. Those issued show-cause notice include Santosh Promoters Pvt Ltd, Pennar Trading Pvt Ltd and Delight Suppliers Pvt Ltd and its Directors Aditya Sarda and Naveen Nayyar.
Sachet Saraf, the Director of Hadwyn Vanijya Pvt Ltd (earlier known as Marigold Vanijya Pvt Ltd) and Metropolitan Stock Exchange of India Ltd; Joseph Massey, the then CEO and MD of Metropolitan Stock Exchange of India Ltd (Exchange on whose portals these unauthorised transactions took place) were also issued show-cause notice.
The ED initiated the investigation under the provisions of Foreign Exchange Management Act (FEMA), 1999, on the basis of information received from the Ministry of Finance.
Investigation revealed that these companies were involved in unauthorised speculative dealings of future currency derivative contracts without having any underlying contract or exposure in foreign currency.
Santosh Promoters, Pennar Trading and Delight Suppliers of Aditya Sarda had entered into unauthorised transactions of Rs 905 crore in just three days during 2011-12 for making speculative gains on fluctuations in foreign currency rates vis-a-vis rupee.
Investigation further revealed that these firms had no real foreign transactions or any kind of trade or business related to any export or import requiring coverage through foreign currency derivatives trading.
The transactions were not backed by underlying exposure or foreign currency whatsoever, the ED said. The broker of Hadwyn Vanijya Pvt Ltd carried out such illegal transactions of future currency derivative contracts without RBI's authorization, knowingly that they are speculative in nature, the agency said.
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