Jignesh Shah's assets seized in National Spot Exchange Limited scam case

Dec 04 2013, 15:57 IST
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Jignesh Shah held 83.29 lakh shares of FTIL as of September 30, amounting to an 18.03% stake in the company. Jignesh Shah held 83.29 lakh shares of FTIL as of September 30, amounting to an 18.03% stake in the company.
SummaryEOW of Mumbai Police moved to recover a substantial part of the Rs 5,575 crore owed by National Spot Exchange Limited (NSEL) to investors.

total amount of Rs 170.91 crore have been frozen.

In its report, E&Y had stated that all the warehouses linked to NSEL trades were accredited by Warehousing Development and Regulatory Authority (WDRA) whereas NSEL’s application for registration of its warehouses with WDRA was rejected in 2009. According to persons aware of the matter, the notice would ask the auditors to clarify why they shouldn’t be debarred from auditing other entities regulated by the FMC. On Tuesday, FMC officials also presided over a cross-examination of Grant Thornton, which conducted a forensic audit on NSEL after the settlement scam broke. FTIL had asked that it be allowed to cross-question some of the findings of the audit, based on which the regulator had challenged the “fit & proper” status of FTIL and Shah. If the status is revoked, FTIL and Shah would need to sell their 26% holding in MCX. A final decision from FMC is still awaited. It is believed that FTIL raised 10 issues on the Grant Thornton report. According to sources, FTIL questioned whether Grant Thornton followed the process of equal justice while filing the report. In response, Grant Thornton clarified that the draft report was submitted with five officials including Shah, Massey, Javalgekar, Anjani Sinha — the former CEO of NSEL — and PR Ramesh, the officer in charge of NSEL. These officials had the opportunity to discuss the findings and any concerns regarding their correctness before the final report was submitted, Grant Thornton said.

Further, FTIL noted that the report in a disclaimer says it does not have the same level of accuracy as that of a statutory audit. To this argument, Grant Thornton replied that while a statutory audit follows accounting standards, a forensic audit is done based on internationally accepted norms. Grant Thornton further clarified that since the audit was completely based on documents and records provided by NSEL, its reliability is higher than that of a statutory audit where the auditor relies on certain judgements.

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