A mysterious ‘yogi’ and shares: How a scandal engulfed National Stock Exchange

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Market regulator SEBI called it “bizarre misconduct” and a “glaring breach” of regulations as former CEO of NSE comes under various probes

Our Bureau
Mumbai

The Central Bureau of Investigation (CBI) is questioning former managing director and chief executive officer of National Stock Exchange (NSE) Chitra Ramkrishna in connection with the National Stock Exchange (NSE) co-location case in Mumbai on Friday.

According to the sources, a look out circular has been issued against Chitra Ramkrishna. A look out circular has also been issued against Ravi Narain, who was MD and CEO of the NSE before Chitra Ramkrishna. Ravi Narain was the MD and CEO of the National Stock Exchange from April 1994 till March 2013, while Chitra Ramkrishna was MD and CEO of the NSE from April 2013 to December 2016.

The Income Tax (IT) Department on Thursday raided various premises linked to Chitra Ramkrishna in Mumbai and Chennai. Ramkrishna has also been on the radar of the market regulator Securities and Exchange Board of India (SEBI).

On Thursday, the Income Tax (IT) Department on Thursday raided premises linked to Chitra Ramkrishna. According to the sources, the IT department raids started early morning on Thursday and are currently underway in Mumbai and Chennai at the premises linked to Chitra Ramakrishna. The income tax department started the search on credible information of tax evasion, an official said.

Chitra Ramkrishna was managing director and chief executive officer (MD & CEO) of the NSE from April 2013 to December 2016.

She has also been on the radar of the market regulator Securities and Exchange Board of India (SEBI).

Last week the SEBI penalized Chitra Ramkrishna, her predecessor at the NSE Ravi Narain, two other officials along with the NSE for lapses in hiring at the senior level. The market regulator found that the NSE and its top officials violated securities contract rules related to the appointment of Anand Subramanian as group operating officer and adviser to the Managing Director.

SEBI has slapped a penalty of Rs 3 crore on Chitra Ramkrishna, in a fresh order in the co-location case. The 190-page order also faulted Ramkrishna for running the exchange at the behest of a mysterious yogi. The market regulator SEBI called it “bizarre misconduct” and a “glaring breach” of regulations.

Ramakrishna was the second-highest paid executive in the financial services industry in FY16, before she quit. She was appointed joint managing director of NSE in 2009 and promoted to CEO in 2013. Her salary that year was second only to Aditya Puri’s, then managing director of HDFC Bank, who took home Rs 9.7 crore, and almost three times that of BSE CEO Ashishkumar Chauhan, who earned Rs 3.3 crore.

But in 2015, things started to unravel. A Singapore-based whistle-blower alleged that a Delhi-based member on the NSE was able to access privileged price information by linking to servers and getting access to the least crowded servers. This later came to be known as the co-location scam where select traders were allegedly given preferential access to data and trading systems through the co-location facility at the exchange. Ramakrishna resigned from NSE in December 2016 due to personal reasons.

The Securities and Exchange Board of India (SEBI) has penalized the National Stock Exchange (NSE) and its former CEOs Chitra Ramkrishna and Ravi Narain, and two other officials for lapses in hiring at senior level. V R Narasimhan, who was the chief regulatory officer and chief compliance officer of the NSE at the time of the violation of norms, has been directed to pay Rs 6 lakh.

In addition to this, the market regulator has barred the National Stock Exchange from launching any new product for a period of six months.

In the order, the market regulator SEBI noted that Anand Subramanian was appointed without following due procedure and he was given unequal pay of more than Rs. 4 crore per annum higher than most of the seniors at NSE.

“Noticee no. 6 (Anand Subramanian) was also an accomplice with the unknown person who influenced the decision of Noticee no. 1 (Chitra Ramkrishna) and thereby benefitting himself by being re-designated as ‘group operating officer and advisor to MD’ and having the compensation being paid to him increase substantially each year, upon the advice of the unknown person to Noticee no. 1,” SEBI said in the order.

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