Market regulator SEBI has ordered a forensic audit into the workings of the Metropolitan Stock Exchange (MSEI), formally known as MCX SX, on allegations of mismanagement and financial irregularities.
The audit has been ordered after a whistleblower and shareholders of the exchange sought scrutiny on several aspects including the money allegedly spent by MSEI, fearing the exchange was fast eroding its net worth that could soon fall below the regulatory requirement of ₹100 crore. Allegations are that MSEI spent dual office rent for premises at BKC and Kurla even when they occupied only one premise and caused a loss of around ₹1 crore. It has also been alleged that MSEI paid Latika Kundu, MSEI’s MD and CEO since March 2020, around ₹18 lakh for relocating from the US to India along with her family when she took up the job.
When contacted, Kundu told BusinessLine that the exchange management favoured the audit and agreed with SEBI’s suggestion to get it done to put issues at rest. She said no large shareholder has been complaining as they were firmly behind MSEI and reposed faith in her appointment too. MSEI’s current net worth is around ₹164 crores and the exchange was making efforts to save cost as a result of which “our losses came down significantly in last financial year and we continue to strive hard to grow the business,” she said.
On the allegations related to the office space, Kundu said, “The rental office deal was not cut by me. It was a bare-shell premise (even without flooring) at Kurla. Due to Covid lockdown restrictions and to compensate for the cost, we renegotiated the rental and managed to save ₹80 lakh. Also, the offer to relocate me to India was in line with industry practice and the cost was sanctioned by the board and SEBI.”
In a release late on Sunday, MSEI said there were few disgruntled former employees who were using various fora to spread baseless allegations.
Some shareholders have also blamed MSEI for dragging its feet on recovering ₹856 crore from the National Stock Exchange. In 2011, the Competition Commission of India found NSE guilty of anti-competitive practices and awarded ₹856 crore to MSEI. Later, the NSE moved SC and the case has since been in limbo. A whistleblower has told SEBI that MSEI was delaying the Supreme Court hearing by not submitting vital documents and thus causing a loss to the exchange and shareholders.
Kundu said that she has been on top of this issue since her second day in office. “Allegations about the SC case are false. The case is a top priority. Exchange is pursuing it and all relevant materials have been made available to the legal counsel. However, the case being sub-judice, we cannot comment further,” Kundu said.
The SC started electronic hearing of cases due to the pandemic. Sources say MSEI pressed for e-hearings but the other parties (NSE and CCI) opposed it.