Former managing director of NSE and its former group operating officer accused in co-location scam case
Former managing director of NSE and its former group operating officer accused in co-location scam case
The Central Bureau of Investigation has filed a chargesheet against the former Managing Director of the National Stock Exchange (NSE) Chitra Ramakrishna and its former group operating officer Anand Subramaniam in the alleged co-location scam case.
After several rounds of questioning, the agency arrested Mr. Subramaniam in February and a few days later, Ms. Ramakrishna was also arrested. The move comes after the Securities and Exchange Board of India (SEBI) imposed fines on two accused and others in different cases on February 11 and then searched their premises in Chennai and Mumbai by the Income Tax Department.
Presently both the accused are in judicial custody. A special court is scheduled to hear their bail applications later this month.
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The CBI had registered the case in May 2018. It was alleged that OPG Securities, a Delhi-based broker firm owned by Sanjay Gupta and a few others, used an algorithmic trading software to gain preferential access to NSE server data during 2010-14. Conspiracy with some data center staff members. Due to the then available co-location facility, the accused also got instant data access through the secondary server of the exchange.
The software was developed by accused Ajay Narottam Shah using trading data of the exchange collected in 2005-06 for the purpose of research work. As alleged, the data was shared with Infotech Financial Services Pvt Ltd and Mr Shah, despite the fact that the company had supplied algorithmic software to various brokers on NSE and hence, there was a conflict of interest.
abuse of office
The role of unidentified officials of SEBI and NSE in the same case was also under investigation for suspected abuse of official position.
In addition, the CBI is currently probing the exchange of emails between Ms. Ramakrishna and a “Himalayan yogi”, on whose instructions he allegedly took several important decisions. They included the appointment of Mr. Subramaniam as Chief Strategic Adviser, his re-designation as Group Operations Officer and huge increments in quick succession for him, as alleged.
The agency has accused Mr Subramaniam of creating the email id “rigyajursama@outlook.com” through which the unidentified “yogi” was in constant touch with Ms Ramakrishna and would obtain confidential NSE documents from her. CBI has retrieved around 2,500 email exchanges which are being analysed. It has also approached Microsoft for technical support.
Ms. Ramakrishna was the Managing Director and Chief Executive Officer of the Exchange from April 1, 2013 to December 2, 2016. The alleged co-location scam was reported to SEBI in January 2015 by a “whistleblower”, triggering a chain of events. Leading to Mr. Subramaniam’s resignation in October 2016 and then to Ms. Ramakrishna’s stepping down.