New Delhi: Former Chief of National Stock Exchange (NSE) Chitra Ramkrishna “purposefully did not have defined policies, which gave unfair advantage to unfair brokers at the cost of others”, the Central Bureau of Investigation (CBI) has found. The agency is probing alleged manipulation of servers at India’s largest stock exchange between 2010 and 2014, which gave some brokers preferential access to the NSE platform.
According to sources in the CBI, it was during Ramkrishna’s tenure that the co-location set-up was “conceptualised and implemented”. A co-location set-up allows the broker’s computer to be located in the same area where the server of the stock exchange is located. This gives the person approximately a ten-fold speed advantage in comparison to other brokers.
Ramkrishna, arrested Sunday in connection with the case, is also accused of passing on crucial information related to the NSE to a “Himalayan yogi”.
‘Has been evasive, misleading investigators’
According to the CBI sources, Ramkrishna has been “evasive” during interrogation and has been “refusing to divulge details”.
The CBI, while seeking Ramkrishna’s custody, also told the court Monday that when she was questioned along with her former aide — Anand Subramanian, who was a Group Operating Officer (GOO) at NSE and was appointed by Ramkrishna — she “refused to recognise him”.
According to sources, there are around 2,500 emails that have been exchanged between the two.
“She has been extremely evasive. When confronted with facts and findings of the investigation, she does not say anything and in fact tried to mislead by introducing new facts,” a source said. “She even refused to recognise the man she had appointed and given promotions. We have an entire record of the exchanges between them, but she has been refusing to accept the same,” the source added.
Ramkrishna allegedly shared crucial and confidential information of the NSE with an individual she called a “Himalayan yogi”, investigators said. The CBI suspects that the said yogi is Subramanian, who was arrested last month and is in CBI’s custody.
Subramanian was first appointed as chief strategic adviser at the NSE in 2013, and Ramkrishna promoted him to GOO in 2015. The market regulator Securities and Exchange Board of India (SEBI) had pointed out in a report earlier this month that the appointment of Subramanian was one of the decisions that Ramkrishna took under the influence of the ‘yogi’.
‘NSE chief chose to ignore fraud’
During investigation the CBI has found that NSE servers were manipulated in connivance with its officials, which led to “wrongful gains” to a company and “wrongful loss” to other brokers and traders.
Bribes were paid not only to NSE, but also SEBI officials for a favourable report after the alleged tampering of servers and facts related to preferential access of data first came to light in 2012, the investigators told ThePrint.
According to CBI sources, NSE Chief Ramkrishna “purposefully did not have defined policies and procedures with regard to secondary server access which gave unfair advantage to unfair brokers at the cost of others”.
In its investigation, CBI found that NSE failed to maintain backup records for the configuration file which captured parameters like the IP address, port number and vendor file, and sequence in which ports would receive TBT (Tick by Tick) data or requests for change of the configuration file by numbers.
It was in 2018 that the CBI first received source-based information, alerting it about the alleged scam, and an FIR was registered in the matter. According to the central agency, there was information that during 2010-2014, Sanjay Gupta, owner and promoter of Delhi-based stock broker OPG Securities, allegedly connived with officials of NSE and abused its server architecture.
“Investigation has also revealed that certain brokers, including OPG Securities, unfairly gained advantage by consistently being the first member to connect to TBT servers,” the CBI source quoted above said.
According to the CBI sources, the NSE allegedly took no action to resolve this despite having knowledge of it. Investigations revealed that OPG Securities had allegedly mapped multiple IPs to a single server, such that it would often get the first two, or even three, connections to that server and crowd out the other members.
Investigation also revealed that Ramkrishna allegedly facilitated providing confidential trading data to a person name Ajay Shah and Infotech Financial Services Pvt Ltd, knowing fully well that the company was providing algorithmic software to brokers in NSE and that there was a conflict of interest, said the sources.
“This is after she knew that the directors of Infotech — Sunitha Thomas is the wife of Suprabhat Lata, SVP at NSE,” the source said.
Co-location implemented during Ramkrishna’s tenure
The CBI told the court in their remand application (seen by ThePrint) that it was during Ramkrishna’s tenure as Joint MD, NSE, that the co-location set-up was conceptualised and implemented.
Ramkrishna worked as Joint MD, NSE between 2009 and 31 March, 2013 and it is alleged that it was during this time that the co-location set-up was conceptualised and implemented. She was appointed MD and CEO of NSE on 1 April, 2013.
“Investigation has revealed that during the period 2013-16 after accused Chitra Ramakrishna took over as MD & CEO of NSE, OPG Securities Pvt Ltd was allowed to connect to secondary server of the COLO-TBT Dissemination server (of NSE) for over 300 trading days causing it undue gain,” the CBI said in its remand application.
It also said that OPG Securities Pvt Ltd was warned repeatedly the NSE in 2012 that accessing the secondary server is a violation of its rules and guidelines.
The NSE, however, “stopped issuing such warnings to OPG Securities without any justifiable reasons during 2013 when Ramkrishna was MD & CEO of NSE”, the CBI said.
The CBI also told the court Monday that investigation has revealed that Muralidharan Natarajan, the CTO of NSETECH (a subsidiary of NSE), was responsible for putting in place the co-location architecture at NSE and he was reporting to Ramakrishna at that time.
Ramkrishna has been sent to seven days custody by the CBI court and during her interrogation she will be confronted by the digital and forensic evidence that the agency has collected in connection with the case.
The remand was opposed by senior advocate Trideep Pais, representing Ramkrishna. He told the court that she had already joined the investigation on a number of dates with CBI and is “fully cooperating”.
Source: The Print