An audit ordered by the Securities and Exchange Board of India (Sebi) of brokers involved in the 2013 payments crisis at the National Spot Exchange Ltd (NSEL) has found that they mis-sold NSEL products, said three persons familiar with the development, including a Sebi official.
The regulator has indicated this to third-party auditors looking at the books of these brokers. Sebi had on April 4 given the brokerages 60 days' time to have their books vetted by third-party auditors.The examination of the NSEL brokers is complete and Sebi has written to the department of economic affairs in the finance ministry. The brokerages include Anand Rathi Commodities, India Infoline Commodities, Geofin Comtrade, Phillip Commodities and Motilal Oswal Commodities.
The regulator has indicated this to third-party auditors looking at the books of these brokers. Sebi had on April 4 given the brokerages 60 days' time to have their books vetted by third-party auditors.The examination of the NSEL brokers is complete and Sebi has written to the department of economic affairs in the finance ministry. The brokerages include Anand Rathi Commodities, India Infoline Commodities, Geofin Comtrade, Phillip Commodities and Motilal Oswal Commodities.
There were several irregularities found, which included instances of contract notes issued by brokers not matching trade records of the exchange. Instances of discrepancies and manipulation of books of accounts need to be verified further. This can be done by a forensic audit of banking transactions made between brokers and clients.
The NSEL crisis came to light in July 2013, when the National Spot Exchange(NSEL) was unable to repay so called 13,000 trading clients, who were trading on the platform. The National Spot Exchange (NSEL) did not have adequate goods in its warehouses as promised by brokerage firms to their clients. Nor, did the settlement guarantee fund have enough money for repayment.
The audit was performed on the books of accounts of Anand Rathi Financial Services Ltd (Rs.629 crore), India Infoline Commodities Pvt. Ltd (Rs.326 crore), Geojit Comtrade Ltd (Rs.313.25 crore), Motilal Oswal Commodities (Rs.263 crore) and Phillip Commodities (Rs.140 crore).
The audit was performed on the books of accounts of Anand Rathi Financial Services Ltd (Rs.629 crore), India Infoline Commodities Pvt. Ltd (Rs.326 crore), Geojit Comtrade Ltd (Rs.313.25 crore), Motilal Oswal Commodities (Rs.263 crore) and Phillip Commodities (Rs.140 crore).
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