Sebi probing fraud allegations at MSEI

The Securities and Exchange Board of India (Sebi) is probing allegations of fraud and irregularities at the Metropolitan Stock Exchange of India (MSEI).

The probe has been initiated following complaints by two whistleblowers, who have highlighted issues relating to governance, mismanagement and siphoning off funds at the exchange. The issue came to light after P Radhakrishnan, Minister of State for Finance, revealed the alleged irregularities to the Lok Sabha in a written reply.

In their complaints, the whistleblowers have levelled allegations against officials of the exchange, including Udai Kumar, MD and CEO, of the exchange. Allegations have also been levelled against brokers.

“The complaints have been examined in detail by Sebi and as an interim measure, directions have been issued to the governing board of MSEI to constitute a committee of public interest directors (PIDs) to examine all the allegations levelled by the whistleblowers against the management,” Radhakrishnan said in the reply.

“Based on the recommendations of the committee of PIDs, action against the entities/persons found to be involved in malpractices will be taken,” he added.

MSEI has engaged the services of forensic auditor for the purpose of examination, including assessing the actual magnitude of fraud. Allegations against brokers are separately being looked into.

Kumar has been directed to go on an indefinite leave to ensure fair and uninterrupted examination of the charges levelled in the complaints of the whistleblowers. MSEI, formerly known as MCX-SX, was founded by the Multi-Commodity Exchange (MCX) and Financial Technology India (FTIL). Following the National Spot Exchange (NSEL) fraud, the exchange had to undergo change in shareholding and management.