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Jun 19, 2017 11:27 AM IST | Source: Moneycontrol.com

SEBI to appoint forensic auditor in NSE co-location case: Sources

Sources have told Moneycontrol that the regulator has initiated comprehensive investigation of NSE employees, brokers and any other entities seen to be involved in the case.

SEBI to appoint forensic auditor in NSE co-location case: Sources

Tarun Sharma

Moneycontrol News

The Securities and Exchanges Board of India is in the process of appointing a forensic auditor to determine the profits made by stockbrokers, clients and software providers in the NSE co-location case.

Sources have told Moneycontrol that the regulator has initiated comprehensive investigation of NSE employees, brokers and any other entities seen to be involved in the case that relates to giving preferential access to some of the exchange’s clients.

SEBI is in the process of appointing forensic auditor against brokers who were named in report of the technical advisory committee and in Deloitte’s forensic audit report.

In a letter to MP Kirit Somaiya dated June 14 (Moneycontrol has seen a copy of this letter) who has raised this issue, SEBI chairman Ajay Tyagi has confirmed that appointment of a forensic auditor is underway.

The regulator has already captured data and e-mail records of these brokers, and is analysing these records, dating from a period of 2010 to 2015. SEBI is also investigating software providers and clients of these brokers.

SEBI sources told Moneycontrol analyzing data would be easy for the “forensic auditor as brokers have to maintain records of past years’ transactions, as per regulation.” It is believed that the wife of one NSE employee, which had received a showcause notice from SEBI previously, was also providing assistance to some brokers.

In his reply, SEBI chief Tyagi also talked about the showcause notice that has been served previously and said that SEBI would not close the case before analyzing transaction data from broker. He added that the regulator would “comprehensively investigate” charges of collusion between exchange officials and brokers.

There were reports previously that NSE had decided to pursue consent mechanism in the case.

“This is a severe case. We will come to know the full gravity of the case when the full profit figure comes out from the investigation,” an ex-SEBI official and currently a practicing laywer told Moneycontrol.
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