NSE co-location case: CBI arrests former NSE GOO Anand Subramanian

The Central Bureau of Investigation (CBI) late on Thursday night arrested Anand Subramanian, former Group Operating Officer (GOO) of the National Stock Exchange (NSE) in Chennai after days of questioning, according to sources.

The arrest was made in the case related to the co-location scam, FIR for which was registered in May, 2008, amid fresh revelations about irregularities at the country’s largest stock exchange.

CBI has also questioned Chitra Ramkrishna, former managing director (MD) and CEO of NSE and former Chief Executive Officer (CEO) of the exchange Ravi Narain. A SEBI report earlier this month revealed that Ramkrishna took key decisions at the NSE from 2013 to 2016 on the advice of an unknown “Himalayan yogi”, whom she had never met and who instructed her to appoint Subramanian as group operating officer.

Subramanian was offered a salary of Rs 1.68 crore per annum to join NSE as chief strategic advisor from April 1, 2013 when he was vice president at Leasing & Repair Services of Transafe Services Limited, a subsidiary of Balmer Lawrie & Co. His salary was less than Rs 15 lakh per annum. Sebi, in its report earlier this month, observed that best practices were not followed in Subramanian’s appointment.

In less than three years, Subramanian’s salary jumped to Rs 4.2 crore for working as a consultant for four days in a week. Subramanian was later re-designated as group operating officer (GOO) and advisor to MD with effect from April 01, 2015, but was never declared a key management personnel by NSE.

ALSO READ: NSE co-location case: Who is Anand Subramanian and why he is arrested?

Sebi had penalised NSE, Ramkrishna and Narain for governance lapses in hiring Subramanian. Ramkrishna, Narain, Subramanian and NSE were told to pay Rs 2 crore each. Ramkrishna and Subramanian were restrained from associating with any market infrastructure institution or Sebi-registered intermediary in any capacity for a period of three years. Narain was barred for two years.

The four-year-old CBI FIR was primarily against Sanjay Gupta, MD of OPG Securities, and it also named his brother-in-law Aman Kokrady and Ajay Shah, a data specialist and researcher employed by the NSE, along with unknown officials of the NSE and Sebi for their role in the controversy.

Between June 2010 and March 2014, the NSE had deployed the so-called tick-by-tick (TBT) architecture at its colo facility. TBT disseminated data feed sequentially, giving preference to trading members (TM) that had connected first to the colo server.

Taking advantage of the system, OPG Securities frequently obtained first access to the exchange system in connivance with certain NSE staffers. The issue was brought to light by a whistleblower, Ken Fong, who sent three complaint letters to SEBI in January, August and October 2015, following which the regulator initiated multiple investigations and forensic audits into the matter.

In April 2019, Sebi directed the exchange to disgorge Rs 625 crore, along with an interest of 12 per cent annum since 2014, for lapses at its colo facility that allowed unfair access to certain brokers. Sebi also asked Narain and Ramkrishna — who were at the helm when the exchange servers were exploited — to disgorge a fourth of their salary for a said period and also barred them from associating themselves with a listed company or market intermediary for five years.

The market regulator directed OPG Securities, Gupta, and three others to disgorge Rs 15.6 crore — with an interest of 12 per cent per annum since April 2014 — that they made “unlawfully”. All of them moved the Securities Appellate Tribunal against the order, where the matter is currently being heard.

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