ET looks at the order and its implications:
What is the Sebi order all about?
Sebi disclosed alleged misdemeanours by Ramkrishna, including leak of confidential information about NSE and the appointment terms of Anand Subramanian as the stock exchange’s chief operating officer during her tenure, between 2013 and 2016. Controversy over the disproportionate salary and benefits to Subramanian, who had little experience in the capital markets, first erupted in 2015-16, but the matter died down after Ramkrishna and Subramanian quit NSE late in 2016. The issue resurfaced after the latest Sebi order, which revealed some highly unusual details of the last few years of her tenure at the NSE.
When did Sebi first stumble upon alleged wrongdoings at the NSE?
Between 2015 and 2016, Sebi and the government received a series of anonymous whistleblower letters. It is not clear if all the letters came from a single whistleblower. All the letters broadly made allegations over corporate governance lapses at NSE, but the specifics of each were different. For instance, a whistleblower letter in January 2015 talked about a few brokers who received preferential access to NSE servers through a co-location facility. Similarly, the market regulator received two whistleblower letters in December 2015 and November 2016 making allegations about the elevation of Subramanian. The complaints were too serious for Sebi to brush aside given NSE’s standing as one of the premier market infrastructure institutions in the country. This prompted it to initiate the probe.
What is the status of the co-location case?
In the co-location case, certain brokers got preferential access to NSE’s servers during 2010-2014, which allowed them a split-second faster access to the data feed of the exchange. This facility helped algorithm traders get advantage. In 2019, Sebi directed NSE to disgorge ₹624.89 crore, and barred it from accessing the market for funds for six months after it found lapses in the usage of this facility. The regulator also directed Ramkrishna and her predecessor Ravi Narain to disgorge 25% of their salaries during a certain period. In 2021, Sebi imposed penalties on NSE, Narain and Ramkrishna in the case.
Why has Sebi put the spotlight on Ramkrishna now?
Earlier, Sebi’s probe was largely focussed on allegations of misuse of the co-location facility that involved NSE officials, brokers and some academics. During the course of that investigation, Sebi discovered that Ramkrishna was sharing confidential information about NSE, including details of organisation structure, dividend scenario and financial results, with someone who was not an employee of the exchange. A deeper probe revealed Ramkrishna’s close association with the anonymous ‘unknown person’ whom she, in her submissions to Sebi during its probe, referred to as a ‘Siddha Purusha’ or a ‘Yogi’ living in the Himalayas. Ramkrishna claimed that the ‘unknown person’ did not have a ‘physical persona’. Sebi said in its order that the ‘unknown person’ influenced some of Ramkrishna’s official decisions at NSE.
Who is the ‘unknown person’ mentioned in the order?
NSE, based on a forensic investigation report of E&Y, had submitted that the ‘unknown person’ was Subramanian, Sebi said it its order. As per the E&Y report and a report of a psychology practitioner submitted by NSE, Subramanian had exploited Ramkrishna by creating another identity. Sebi did not accept the argument that the unknown person and Subramanian were the same. The Sebi order has, however, not revealed the identity of the person.
What is the link between Ramkrishna, Subramanian and the ‘unknown person’?
The ‘unknown person’, to whom Ramkrishna passed on confidential information about the bourse, had persuaded her to increase the pay package of Subramanian. The ‘unknown person’, in turn, instructed Subramanian to make a payment to him/her as ‘gratitude’ every month. Ramkrishna had claimed that she had never met the ‘unknown person’. Sebi has, however, used portions of the email communication between the two in 2015 to establish that they had met.
What is the road ahead for Ramkrishna?
Ramkrishna could approach the Securities Appellate Tribunal to appeal against the Sebi order, but it is not clear if she wants to fight the case. The former NSE chief has maintained a low profile since she left the institution. If further evidence of personal misconduct is found, other government agencies could also initiate investigations against her.
