Home / Market / Stock-market-news /  FMC finds UCX CEO Praveen Pillai unfit to manage commodity bourse

Mumbai: In an order issued just days ahead of its formal merger with the Securities and Exchange Board of India (Sebi), the Forward Markets Commission (FMC) ruled that Praveen Pillai, chief executive officer of Universal Commodity Exchange Ltd (UCX) is not a ‘fit and proper’ person to run the bourse.

According to FMC, Pillai failed in his role to manage the affairs of the exchange in a transparent manner and also did not display any intent to stop financial irregularities at the bourse.

“...irregularities at UCX also signifies palpable unprofessional conduct, negligence and malpractice on his part, putting his general reputation and record of fairness, integrity and honesty at serious risk," said a 50-page FMC order issued on Tuesday.

This is the first time since the December 2013 order against the National Spot Exchange Ltd (NSEL) that the FMC has issued an order related to the ‘fit and proper’ status of a senior official of a commodity exchange.

“Praveen Pillai as a managing director & CEO of UCX has not displayed any independent action nor did he take any measure to resist or stop the financial irregularities being perpetrated on the exchange. Even prior to his appointment as MD & CEO of UCX, Praveen Pillai has actively associated himself with Ketan Sheth (ex-chairman and director) in his misdemeanors, ignoring the conflict of interest he was indulging in at the time of dealing with financial transactions with UCX," says the order.

Pillai also failed to comply with the regulatory directives as revealed from the forensic audit report and has grossly failed in managing the affairs of UCX with transparency, fairness and integrity, the order added.

In the first week of July 2014, FMC officials found that money was withdrawn from the settlement guarantee fund (SGF) of UCX and given to related parties and that the audit and the SGF committee of the bourse had not met for a long time.

Further, the unaudited balance available with UCX showed that the exchange had almost exhausted the paid-up capital of 100 crore. On 11 July 2014, FMC asked UCX to show cause why trading should not be suspended. Thereafter, the board on 14 July decided to suspend all trading activities on the exchange.

FMC directed UCX to get a forensic audit done and the exchange appointed KPMG for the same in August 2014.

“The forensic auditors have come out with various disturbing findings that give an insight into the murky details of financial irregularities and mismanagement of funds that the exchange has suffered at the hands of its promoter and his group companies holding shares in UCX, apparently with the knowledge and acquiescence of the MD & CEO of the exchange," says the order.

Catch all the Business News, Market News, Breaking News Events and Latest News Updates on Live Mint. Download The Mint News App to get Daily Market Updates.
More Less

Recommended For You

Trending Stocks

×
Get alerts on WhatsApp
Set Preferences My ReadsWatchlistFeedbackRedeem a Gift CardLogout