NSE Colo Scam: Anand Subramanian's Bail Plea Rejected by Special CBI Court
Moneylife Digital Team 24 March 2022
A special Central Bureau of Investigation (CBI) court in New Delhi on Thursday rejected the bail plea of Anand Subramanian, former group operating officer of National Stock Exchange (NSE), in the co-location (Colo) case. CBI is probing the alleged abuse of the Exchange's server architecture for granting preferential access of market data to a stockbroker ahead of others.  
Earlier this month, the special court has reserved its order. CBI had opposed the bail plea at that time, saying that Mr Subramanian did not deserve bail. It contended that the NSE's former group operating officer should not be released on bail as it could affect the ongoing probe.
Mr Subramanian was arrested by CBI on 24 February 2022.  CBI got his custody till 9th March after which he was sent to judicial custody.
On 14th March, the special court sent Chitra Ramkrishna, former managing director and chief executive officer (MD & CEO) of NSE, to 14 days of judicial custody. She is lodged at Tihar Jail. 
A CBI court also refused to give VIP treatment to Ms Ramkrishna. "Every Person is the same. She cannot be a VIP prisoner because of what she had been. Rules cannot be changed," observed the judge.
However, the court permitted her to carry four books, including a copy of Hanuman Chalisa and Bhagwad Gita, for prayers.
Ms Ramkrishna was arrested on 7th March, a day after the special court in Delhi dismissed her petition for a pre-arrest bail plea and pulled up the CBI for inaction and being 'lackadaisical' in the probe against her over the past four years. 
While rejecting her counsel's request for home-cooked food in jail, special judge Sanjeev Aggarwal also asked Ms Ramkrishna to be physically produced before the court on 28th March, "I've also had it... It's good," the judge remarked.
The court also turned down the lawyer's plea to allow her to carry masks.
The CBI in its submission told the special court that Anand Subramanian was well-connected with Ms Ramkrishna prior to his engagement as her chief strategic adviser at NSE. His wife Sunitha Subramanian also served as the regional head of NSE at Chennai from April 2011, the agency says.
As reported by Moneylife, the enforcement directorate (ED) has stepped in to examine a possible money laundering angle in the NSE  Colo scam.
Over the past few days, CBI has taken statements from all the senior NSE officials who had been named in the show-cause notices issued by the Securities and Exchange Board of India (SEBI) over the past seven years. 
Many senior officials from NSE, having recorded their statements, have been made to confront Ms Ramkrishna, the former MD and CEO who quit the Exchange in 2016. However, Ms Ramkrishna, say sources, has steadfastly denied all responsibility for the Colo scam and claimed that only the technology team would have answers to issues like preferential access.    
We learn that the CBI team has done extensive work on the scam and seems up-to-date with all developments. However, it is not clear if they are correctly focused on who are the beneficiaries of the crooked system, which was facilitated by a porous and easy-to-manipulate access system. 
It is also unclear if the focus is on Ms Ramkrishna or Ravi Narain, former MD and CEO of NSE. After all, Colo and high-frequency trading (HFT), including scandals, had happened long before NSE began trading (Michael Lewis's book Flash Boys is all about it). Hence, it is hard to believe that the Exchange forgot to put in place a process that ensured a level playing field for very large investors, who put through millions of trades in seconds. (Read: Moneylife Exclusive: Enforcement Directorate Steps in to Probe Money Laundering Angle in NSE Colo Scam)
The Colo case dates to 2015 when Moneylife published a letter by a whistle-blower going by the name Ken Fong in June 2015. The whistle-blower alleged that NSE officials were selectively allowing a few brokers to reap massive profits through preferential access to its Colo servers in the form of early log-in or access to servers with low trading loads. 
In February last year, SEBI's adjudication officer imposed a penalty of Rs1 crore on NSE for its failure to ensure a level playing field for trading members subscribing to its tick-by-tick (TBT) data feed. NSE's former MD and CEO Mr Narain and Ms Ramkrishna were penalised with a fine of Rs25 lakh each. 
Before that in April 2019, SEBI had ordered disgorgement of profits from NSE and salaries of former MDs, Ravi Narain and Chitra Ramkrishna.  The regulator has also asked the Exchange to disgorge an amount of Rs624.89 crore along with interest calculated at the rate of 12% per annum to the Investor Education and Protection Fund (IEPF).
Read our coverage on NSE Algo Scam here
Free Helpline
Legal Credit