The former NSE chief executive and his former group operating officer face charges in a co-location fraud case
The former NSE chief executive and his former group operating officer face charges in a co-location fraud case
The Central Bureau of Investigation has filed an indictment against former National Stock Exchange (NSE) executive Chitra Ramkrishna and his former Group Operating Officer, Anand Subramanian, in the alleged co-location fraud case.
After several rounds of questioning, the authorities arrested Mr Subramanian in February and days later Ms Ramkrishna was also arrested. The move comes after the Securities and Exchange Board of India (SEBI) fined the two defendants and others on various counts on February 11, and then the Income Tax Agency raided their premises in Chennai and Mumbai.
Both defendants are currently in custody. Their bail requests are scheduled to be tried in a special court later this month.
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The CBI registered the case in May 2018. It has been alleged that Delhi-based brokerage firm OPG Securities, owned by Sanjay Gupta, and some others used algorithmic trading software to gain preferential access to the NSE server data between 2010 and 2014, in a conspiracy with some data center employees. The co-location option available at the time also gave the defendant faster data access via the exchange’s secondary server.
The software was developed by the accused, Ajay Narottam Shah, who allegedly used the exchange’s trading data collected in 2005-06 for research purposes. As claimed, the data was shared with Infotech Financial Services Private Limited and Mr Shah, although the company supplied algorithmic software to various brokers in the NSE and therefore a conflict of interest existed.
abuse of position
In the same case, the role of unknown officials from the SEBI and NSE was also scrutinized for alleged abuse of office.
Apart from that, the CBI is currently investigating the email exchanges between Ms. Ramkrishna and a “Himalayan yogi” on whose instructions she allegedly made several important decisions. These included Mr. Subramanian’s appointment as Chief Strategic Advisor, his reappointment as Group Operating Officer and what are claimed to have been a rapid succession of huge salary increases for him.
The agency has accused Mr Subramanian of creating the email id “[email protected]” through which the unknown “yogi” was in constant contact with Ms Ramkrishna and would receive the NSE’s confidential documents from her. The CBI retrieved about 2,500 email exchanges that are currently being analyzed. It has also turned to Microsoft for technical support.
Ms. Ramkrishna served as 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 the SEBI by a ‘whistleblower’ in January 2015, sparking a series of events leading up to the resignation of Mr Subramanian in October 2016 and then the resignation of Ms Ramkrishna.
