Hot Spot: Financial Technologies chairman Jignesh Shah faces an acid test

MUMBAI: The dholidas warmed up as the men stepped out of the car at Exchange Square. The beat of dholaks filled the sultry air. There was no baraat but it was Jignesh Shah's moment. In the customary Gujarati style of celebration, he greeted the legal team that brought the good news: the court has finally given the green light for the stock exchange that Financial Technologies ( FT), the group Shah founded, was sponsoring.As a jubilant staff gathered around him, the man, with a penchant for Bollywood dialogues, rattled off the Salman Khan one-liner, "Ek bar jo maine commitment kar di, uske bad main apne aap ki bhi nahi sunta..." That was April 2012.
Today, Shah has to give a commitment of another kind to salvage his reputation and remain "fit and proper" in the rule book of regulators. It was a weekend he will remember forever: Ramesh Abhishek, the no-nonsense chairman of the Forward Markets Commission, has read the riot act; thousands of wealthy investors whose money is stuck with the FT-promoted spot commodity exchange are crying foul; and food and consumer affairs minister KV Thomas is desperate to find a solution to the Rs 6,000-crore question before the monsoon session of Parliament begins on Monday. It's a story that's moved at a blinding speed and stunned everyone as it broke.
Strange business model
An exchange that few outside the commodity market had ever heard of has quietly built a volume of 6,000 crore, thriving on regulatory ambiguity and hawking a strange product that promised a return of 14-15% at a time when gold prices dropped and inflation remained high.
Till mid last week, Shah's cut-and-dried statements that followed the National Spot Exchange's (NSEL) payout failure and suspension of trade were perceived as attempts to keep alive fund managers' interest in shares of Financial Technologies - the group flagship and money-spinner where Shah is the chairman. Most of the talking was done byAnjani Sinha, the man who was given a long rope by Shah and was responsible for designing products and the day-to-day running of the spot bourse which is now at the centre of the controversy. "Why am I being penalised? I'm abroad 10-15 days a month and can devote two-three days on a company. There is a professional team in place, I have always given professionals a chance. You in the media are attacking me and it's a social embarrassment," Shah told ET on Sunday between meetings with brokers (whose clients are breathing down their neck) and processors who have been financed by the product that government and the regulator find unacceptable.