Commodity markets regulator FMC today said auditing firm KPMG has been appointed to conduct a forensic audit of the Universal Commodity Exchange after it found that its promoter allegedly siphoned off funds from the exchange. The auditing firm will submit a detailed report in 4-6 weeks. Meanwhile, the exchange has been directed to maintain the current cash balance of Rs 52.52 lakh intact in the Settlement Guarantee Fund (SGF) and not to withdraw any amount without the regulator's approval, it said.
FMC has also directed UCX, the country's sixth national level commodity bourse, to convert other investments in Optional Convertible Debentures (OCDs) and advances made out of SGF fund into liquid assets immediately. "The exchange on August 28, 2014, has engaged M/s KPMG as the forensic auditor to carry out the forensic audit at UCX. KPMG is likely to submit its report to the Commission in 4-6 weeks," Forward Markets Commission said in its latest report.
KPMG will do forensic investigation into "the serious charges and allegations of misappropriation of funds by the promoter of UCX since the inception of the exchange," it said. A forensic auditing of UCX was ordered after taking into account preliminary findings on gross financial irregularities and diversion of funds from SDF and on the basis on feedback from the Board of Directors of the exchange, it added.
UCX is promoted by Commex Technologies chief Ketan Sheth, who owns 40 percent stake in the exchange. He was not available for comment when contacted. According to the FMC, the exchange has submitted a report on the 'Status of Funds availability in SGF' giving details of member-wise refundable amounts to registered members and also the break-up of various outstanding expenditure pending at the level of exchange.
The regulator was informed "that the Promoter has paid Rs 1 crore from one of his group companies to the exchange". FMC said it has directed UCX to maintain the cash balance of Rs 52.52 lakhs presently available in SGF intact and to convert other investments in OCD and advances made out of SGF fund into liquid assets immediately.
"The exchange has also been instructed to keep the Commission apprised of all its future receipts, from whatever source and not to withdraw any amount from such receipts without prior approval of the Commission," it added. UCX, which was launched in April 2013, suspended trading in all commodities on July 19. It offered futures trading in oil seeds, pulses, crude oil and natural gas. Currently, NCDEX, MCX, NMCE and ACE derivatives are the commodity exchanges that are active in the country.