NSEL says FMC auditor overstepped terms of reference

The National Spot Exchange Ltd, caught up in allegations of rigging at its cash commodities exchange, alleged that the auditor Chokshi & Chokshi, appointed by the regulator, overstepped its terms of reference while drawing up its final report.

Jignesh Shah

NSEL said it was yet to get a final copy of the report, which has hit media headlines for having allegedly unearthed anomalies at the exchange, including apparent cases of circular trading.
The company, an associate of Financial Technologies, said the Forward Markets Commission had only asked the auditor to undertake a verification of physical stocks lying with the custodian vis-à-vis the records of CDSL, NSDL and the Exchange. It was alleged that the underlying stocks for some of the trades on the exchange did not actually exist.
Going by the audit firm’s draft report, “the auditors have digressed far beyond the terms of reference (ToR),” said NSEL.
NSEL has highlighted that fact in its management response to the audit report, the company said. We have “requested FMC to consider the same before taking necessary steps,” it added.
“NSEL has also pointed out that many of the issues raised in the audit report were actions taken solely under the direction of the erstwhile MD and CEO Mr Anjani Sinha and his team against whom criminal actions have been initiated.
“Further, it is informed that there have been no funds pay-in defaults in respect of e-Series contracts, so there is no question of the use of funds from other segments or SGF for settling trades in e-Series contracts.It is expected that investors in e-Series units will be able to realize their investments once the FMC and the Courts grant the approval,” it added.