Anand Subramanian arrested in NSE scam

The Central Bureau of Investigation (CBI) finally arrested the controversial Anand Subramanian in the NSE scam. Among the many charges against the former top bosses of NSE, the appointment of Anand Subramanian and his dubious role in all that happened during the NSE algo scam remains pivotal. One major allegation that surfaced during the investigations, based on a whistle blower complaint, was favours doled to certain traders.

The CBI has taken up the case in right earnest and wants to bring the issue to a logical conclusion. The entire issue stems from the preferential access to the NSE's server architecture and misuse of colocation facility. This had given a distinct advantage to certain brokers in that they could get trades executed much before the others did the same. This had been pointed out in the NSE audit, but had been struck down by the then CEO.

The role of Anand Subramanian, the former group operating officer and advisor to former managing director Chitra Ramkrishna, has been one of the most dubious and controversial in the entire NSE saga. He was also designated as the chief strategic advisor in April 2013. There are already look out circulars against Anand Subramanian, Chitra Ramkrishna and Ravi Narain as part of the investigation to prevent them from leaving India.

The allegations against Chitra Ramakrishna are that she had shared highly classified and confidential information pertaining to the NSE’s financial projections, business plans and board agenda with a purported spiritual guru in the Himalayas. There is not much clarity on the identity of this spiritual guru, although some sources do indicate that it was none other than Anand Subramanian himself. This sharing of classified data is a glaring act.

Chitra Ramkrishna and Anand Subramanian have already been subsequently restrained from associating with any market infrastructure institution or any intermediary registered with SEBI. However, large part of the damage to the integrity of the market mechanism may have already been done. Ravi Narain got away with a much lighter rap on the knuckles with just a 2 year ban. That surely looks inadequate for the size of the infringement.

The SEBI has also directed the NSE to forfeit the excess leave encashment of Rs.1.54 crore and the deferred bonus of Rs.2.83 crore of Chitra Ramkrishna. This had been retained by the exchange and they have now been instructed to deposit the money into its Investor Protection Fund Trust. Meanwhile, the Income Tax Department has already conducted searches at the Mumbai residence of Ramkrishna and other officials.

Anand Subramanian may not be the only person culpable in this algo saga, but he is surely one of the key reasons for the scam. Clearly, the unfettered powers enjoyed by Chitra and Anand and the kind of sops they offered to a handful of select brokers are questionable. Also questionable is how a noted economist and market specialist like Ajay Shah has gotten away with sharing confidential NSE data with a third party.