NSE Colo Scam: Special Court Reserves Order on Bail Plea of Chitra Ramkrishna, Anand Subramanian
Moneylife Digital Team 02 May 2022
A special central bureau of investigation (CBI) court in New Delhi has reserved its order on the bail plea filed by the National Stock Exchange (NSE)'s former managing director (MD) and chief executive officer (CEO) Chitra Ramkrishna and ex-group operating officer Anand Subramanian in the NSE co-location (Colo) scam.
According to a report from Bar & Bench, Ms Ramkrishna, accused of frequently revising the designation and compensation of Mr Subramanian, told the special CBI court that "the decision was a collective one of NSE board, which included former Supreme Court judge justice BN Srikrishna, and not her individual decision."
"Senior counsel N Hariharan appearing for Ms Ramkrishna also brought to the notice of the special CBI judge Sanjeev Aggarwal a board resolution to demonstrate that it had always been kept in the loop on the decision making.
"The court took on record the medical report of Ramakrishna and reserved its verdict in the bail plea. The order is expected to be pronounced on 9 May 2022," the report says. 
Both Ms Ramkrishna and Mr Subramanian, currently lodged in Tihar Jail under judicial custody, have been charge-sheeted under various Sections of the Indian Penal Code (IPC).
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.
Earlier, the CBI in its submission, told the special court that Mr 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 weeks, 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)
Last month, market regulator Securities and Exchange Board of India (SEBI) has issued a notice of demand of Rs2 crore to Mr Narain regarding governance issues at the Exchange.
In February 2022, SEBI levied a penalty of Rs2 crore on Mr Narain for his failure to report governance lapses in NSE to the market regulator. 
In that order, Anant Barua, a whole-time member (WTM) of SEBI, had stated, "As an ex-MD and CEO of NSE for 13 years, Mr Narain should be well aware of who is qualified as a key management person (KMP) and how the substantial powers delegated to Anand Subramanian would have made him a KMP, especially given the fact that Mr Subramanian attended all board meeting after being delegated such powers. It is evident that Mr Narain has chosen to ignore all these factors and has also been instrumental in concealing these issues in the minutes of the board meetings." (Read: SEBI Issues Demand Notice to NSE's Former Chief Ravi Narain To Recover Rs2 Crore Penalty)
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
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