FMC gives more time for auditing NSEL's e-series contracts

Commodity market regulator FMC has given more time till January 17 to Mumbai-based chartered accountants Chokshi and Chokshi for completing the forensic audit of the crisis-hit National Spot Exchange Ltd's e-series contracts.

Chokshi and Chokshi, which was given December-end deadline to complete the audit of e-series contracts at NSEL, had sought extension to finish the work.

"Based on your request, it is decided by the Commission to grant extension of time up to January 17, 2014 to complete the work of forensic audit of e-series contracts at NSEL," Forward Markets Commission said in a letter to the audit firm.

FMC had appointed the Chokshi and Chokshi following an order of the Bombay High Court, which is hearing the case filed by aggrieved investors, directing the Commission to appoint a forensic auditor to examine e-series contracts executed

at the troubled exchange and submit a report.

Forensic audit is an examination and evaluation of a firm’s or individual’s financial information for use as evidence in court.

NSEL, which is facing the problem of settling Rs 5,600 crore (Rs 56 billion) dues to 13,000 investors, was offering spot as well as e-series contracts which were subsequently banned by the government following violation of certain norms by the bourse.

Under e-series contracts, retail investors can buy and sell commodities in de-materialised form.

This is a unique market segment, which functions like the cash segment in equities, but offers commodities in the demat form in smaller denominations.

Mumbai Police's Economic Offences Wing has so far arrested five persons, including Anjani Sinha, former MD & CEO of NSEL, in connection with the case. Police has also seized/attached properties belonging to defaulting companies and former executives of the exchange.