The management of crisis-hit National Spot Exchange Ltd (NSEL) misrepresented facts to commodity market watchdog Forward Markets Commission (FMC), the Economic Offences Wing (EOW) of the Mumbai Police said.

EOW of the Mumbai Police has been probing alleged wrongdoing at NSEL over its failure to return investors nearly Rs 5,600 crore.

In its report titled `Misrepresentation of facts,'  the EOW said, "When the FMC asked the NSEL if it was aware of any wrongdoings, the NSEL said that it was not. The audit finds that the NSEL misrepresented the fact to the FMC."

An officer from the investigating team also said that the management of the NSEL was running a ponzi scheme, rather than running an exchange.

The investigators yesterday questioned NSEL's chief financial officer (CFO) Shashidhar Kotian, who revealed that the exchange was using software that mechanically assumed that investments are squared off with deposit of goods of matching value.

Amit Mukherjee, the crisis-hit exchange's vice president of business development department, was taken into custody on Wednesday. On Thursday, Mumbai Police arrested NSEL's former assistant vice president Jay Bahukhundi., who will remain in police custody till 18th of October.