Guwahati, Feb 28: The Central Bureau of Investigation (CBI) on February 24 night arrested Anand Subramanian, former chief operating officer of the National Stock Exchange of India Ltd (NSE). They also suspect that the 'Himalayan Yogi' is Subramanian who was guiding the former Chief Executive of Chitra Ramakrishna in leaking important information related to stock markets wherein some brokers were illegally given faster access to the price feeds disseminated by the exchange, giving them an advantage over the rest of the market.
What is the NSE co-location scam?
The NSE co-location scam is related to the market manipulation of the NSE. It has come to fore that there have been irregularities in the exchange's co-location facility between 2010 and 2015. Allegations were also raised that some brokers were illegally given faster access to the price feeds disseminated by the exchange, giving them an advantage over the rest of the market. The alleged involvement of insiders by rigging NSE's algo-trading and use of co-location servers ensured substantial profits to a set of brokers.
The multi-dollar scam came to light in 2015 when a whistle blower informed markets' regulator, the Securities and Exchange Board of India (SEBI) that some internal elements are making the profits available to other brokers thereby getting an unfair advantage over others while accessing NSE's algo-trading platform.
The case is under investigation by the Central Bureau of Investigation (CBI), the Securities and Exchange Board of India (SEBI) and the Income-tax Department (I-T department). They are also probing the involvement of NSE and SEBI officials, including the former and current executives and brokerages.
As per the term 'co-location', certain brokers received unfair preferential access to NSE servers. This allowed them faster access to the buy and sell orders being disseminated by the exchange's trading engine.
An FIR in the case was registered in May 2018. The original FIR was filed against Delhi-based brokerage OPG Securities and unnamed NSE and SEBI officials.
What action has been taken so far?
The SEBI had earlier in 2017 issued show cause notices to the exchange and fourteen individuals, including former managing directors Chitra Ramakrishna and Ravi Narain. Narain, vice-chairman of NSE, who was serving as chief executive officer (CEO) and managing director (MD) at the exchange during the period when the alleged violations took place.
Chitra Ramakrishnan who was the MD and CE resigned from the exchange in December 2016. As per media reports, the resignation was a result of lack of credibility in the NSE top management due to the co-location controversy.
Another controversy that erupted was the re-designation of Anand Subramanian as Group Operating Officer and Advisor to MD in 2015. This appointment was unusual in the sense that he was elevated without the consultation of the Human Resource Department. The position of Chief Strategic Advisor was not advertised, neither was any other person considered for the position.
Subramanian was given a hefty pay check of Rs 1.68 crore per annum, and by 2017 he was drawing an annual package of Rs 4.21 crore. Complaints regarding the appointment and salary reached the board prompting it to examine the circumstances.
Both Mr. Narain and Ms. Ramakrishna were part of the NSE's founding team, having joined the bourse in 1994.
The CBI had on February 19 grilled erstwhile NSE director Ravi Narain, who held the post before Ramkrishna. He is also a suspect in the case, CBI said.
Who is the 'Himalayan Yogi'?
During the investigation, the CBI has pointed out that the faceless Himalayan 'yogi' communicating with the former chief executive of NSE Chitra Ramkrishna could be none other than Subramanian.
Subramanian, reportedly had access to the email ID on which the emails were sent to the "Himalayan yogi" with whom the classified information was shared.
The CBI had already opened Look Out Circular against Ramkrishna, Subramanian, and Narain, as they were deemed to be at risk of flight.
As per reports, the SEBI came across e-mails showing that Ramakrishnan sent confidential data about the exchange to an unknown email ID [email protected]. Ramakrishna asserted that the e-mail was of a Himalayan Yogi and is a spiritual force who has been guiding her.
CBI sources has said that since they had access to the emails sent to the yogi, they suspect he can be the same. However, the agency did not officially confirm it.
Reports stated that as per forensic reports by consultancy firm E&Y, it was Anand Subramanian himself directing Ramkrishna.
The regulator has further informed that there is no conclusive proof that the person behind the email id was Anand Subramanian.
Meanwhile, Ramakrishna denied that Subramanian is 'Yogi'. She tried to play victim card, claiming she didn't know a lot of things. She also had claimed that she was innocent and somebody was trying to frame her.
