SEBI dumps whistleblower allegations against MCX

Suresh P Iyengar Mumbai | Updated on December 08, 2019 Published on December 08, 2019

Market regulator decides not to entertain complaints without disclosure of identity, supporting evidence

Capital and commodity market regulator SEBI has decided not to pursue whistleblower allegations against Multi Commodity Exchange of India Ltd (MCX)

This comes after the SEBI decided not to entertain complaints made without disclosure of identity and furnishing supporting evidence.

Referring to serious allegations made against MCX by a so-called whistleblower, SEBI said a person named Charul Singh made several complaints against MCX wherein he made grave allegations over certain issues and demanded an investigation by SEBI into each allegation.

The charges

In September, the whistleblower and ‘so-called employee’ of MCX Charul Singh alleged that the exchange is trying to siphon off money by marking-up contracts for developing software, the exchange is favouring a few traders by pushing delivery of sub-standard cotton stocks and it is struggling to handle gold delivery due to insufficient insurance cover. It was also alleged that 90 per cent of MCX’s business coming from top 15 brokers who drive the turnover through algo trading.

Shares of MCX tanked over 10 per cent on a single day after SEBI sought clarification from the exchange on the allegations.

The complainant made these allegations were without any supporting documentary evidence and without disclosure of his real identity.

The name turned out to be fake, the address and phone number non-existent and there was no response from the e-mail ID, said SEBI.

The complainant, the market regulator said, also purported to be whistleblower, shared his unsubstantiated allegations with various media outlets, some of which taking cognizance of his allegations printed articles without any evidence.

As per Whistle Blower Protection Act, a whistleblower shall make a complaint, indicating his identity and accompanied by supporting documents.

“Since it has not been possible to reach the complainant of MCX, it is important to bring to notice of general public that SEBI can entertain complaints only if the concerned complainant is reachable to substantiate any allegation and provide supporting documents. SEBI may not take any action on complaints where SEBI is unable to reach back to the complainant,” the market regulator said.

PS Reddy, Managing Director, MCX, in an interview with BusinessLine had said the so-called whistleblower issue is absolutely fake. “The issues raised in the letter are all humbug. The allegation on bad quality cotton stocks is absolutely trash. The accusations are made to destroy a vibrant exchange platform which has helped the trade hedge its risk,” he had said.

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Published on December 08, 2019
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