Co-location fraud investigation to investigate preferential data access from Exchange server architecture
Co-location fraud investigation to investigate preferential data access from Exchange server architecture
The Central Bureau of Investigation (CBI) on Sunday arrested former National Stock Exchange (NSE) executive Chitra Ramkrishna in a case registered in May 2018 to investigate alleged misuse of the exchange’s server architecture to grant preferential access Market data before others to a stockbroker.
The development came days after former NSE Group operations manager Anand Subramanian was arrested by the agency in the same case. Ms. Ramkrishna, who has worked for the exchange since the early 1990s, was its managing director and chief executive officer from April 2013 to December 2016. More arrests in the case are likely shortly.
On February 11, the Securities and Exchange Board of India (SEBI) imposed penalties on Ms. Ramkrishna, Mr. Subramanian and former NSE Chief Executive Ravi Narain for multiple violations, including irregularities in the appointment of Mr. Subramanian as Chief Strategic Advisor and his renewed Appointed Group Operating Officer and Advisor to the then NSE Managing Director.
Subsequently, the Income Tax Agency had also conducted searches at Ms. Ramkrishna and Mr. Subramanian’s premises in Mumbai and Chennai, while the CBI issued “lookout” circulars against the two and Mr. Narain, after which their statements were recorded by the agency.
The CBI allegedly arrested Mr. Subramanian for not cooperating with the investigation and refusing to reveal the true identity of the “Himalayan yogi” with whom he and Ms. Ramkrishna shared internal confidential documents of the exchange during the investigation. He was in custody until Sunday. The agency noted that he allegedly created the email account [email protected], which was allegedly used by the unidentified person to communicate with the two.
According to the SEBI order, Mr. Subramanian knew the said yogi and he was one of the main beneficiaries of the person’s alleged recommendations to Ms. Ramkrishna. He also knew her before his appointment to the NSE. His wife worked as the regional director of the NSE in Chennai. In January 2013 he was offered £1.68m for the post of Chief Strategic Advisor when his last salary was £15m. He was awarded bids in rapid succession and by 2016 his pay had risen to around 5 crore.
The CBI case targets Delhi-based OPG Securities and others, including unidentified officials from the SEBI and NSE. It is alleged that the company’s top officials exploited certain loopholes in the exchange’s server infrastructure and also conspired with NSE data center staff to gain preferential access to the market feed.
