New Delhi, Jun 28 (PTI) Three individuals on Wednesday settled with markets regulator Sebi alleged violations of Securities Contracts rules in the matter of former officials of Metropolitan Stock Exchange of India Ltd (MSEI) after collectively paying over Rs 33 lakh towards the settlement amount.

Those who settled the case were Balu Nair, who was the interim CEO of MSEI, Kunal Sanghavi, then Chief Financial Officer of the bourse, and Kundan Zamvar, who was holding the position of Vice President - IT and Chief Information Security Officer (CISCO) at the time of the alleged violation, according to Sebi order.

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Individually, the applicants paid Rs 11.05 lakh each towards the settlement fee.

The order came after three persons proposed to settle the pending proceedings, "without admitting or denying the findings of fact" through a settlement order.

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"The instant adjudication proceedings initiated against the applicants vide show cause notice (SCN) dated September 6, 2022, are disposed of," Sebi said in a settlement order.

In the forensic audit report, it was alleged that the applicants have not followed standard operating procedure (SOP) while awarding a big ticket contract to U-trade, failed to carry out vendor due diligence at the time of onboarding U-trade, and made payments without confirming receipt of delivery.

Through such acts, they violated the provisions of the Code of Ethics prescribed under the Securities Contracts (Regulation) (Stock Exchanges And Clearing Corporations) Regulations (SECC Regulations) and accordingly, the markets regulator issued show cause notices to them in September last year.

During July 2019-2021, the Securities and Exchange Board of India (Sebi) received various complaints against MSEI, wherein, irregularities in working of the management of MSEI were alleged. Given such complaints, the regulator had advised the bourse to appoint a forensic auditor to conduct the audit of MSEI covering the allegations.

It was further advised to the Governing Board of MSEI to take suitable action on the observations in the forensic audit report (FAR) against the entities/ persons found to be involved in the malpractices and to submit the ATR to Sebi within 15 days.

Accordingly, MSEI appointed Ernst & Young LLP (EY) to conduct a forensic audit and after that, EY submitted its report to the chairman of MSEI in November 2021. Subsequently, the chairman submitted the ATR to Sebi and also submitted clarification as sought by the regulator.

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