A special court granted seven-day custodial interrogation of former National Stock Exchange CEO Chitra Ramkrishna to the Central Bureau of Investigation (CBI) in the NSE co-location scandal case on Monday, even as the agency is probing the alleged role of more officials of the bourse as Ramkrishna has sought to shift the blame to lower functionaries at the exchange during her interrogation so far.
The court also extended by two days custodial interrogation of Anand Subramanian, Ramkrishna’s former advisor and NSE’s group operating officer, who was already in CBI custody.
“It appears that the custodial interrogation of the above accused would be required to find out the detailed modus operandi adopted by her in conspiracy with the other co-accused persons involved in the present case, including co-accused Anand Subramanian. The present case may be of unimaginable magnitude,” said special judge Sanjeev Aggarwal.
The CBI told the court, seeking a 14-day custodial interrogation, that in four rounds of interrogation so far, Ramkrishna has avoided giving any direct replies to the questions posed and has tried to mislead the agency.
It argued that it needs to confront Ramkrishna with more than 2,500 emails exchanged between her and Subramanian. It also said that Ramkrishna needs to be confronted with officials of NSE, Securities and Exchange Board of India (Sebi) and co-accused in the manipulation of stock market case. Ramkrishna’s custodial interrogation is imperative to unearth the larger criminal conspiracy and the alleged involvement of more NSE officials and brokers, it said.
Ramkrishna also needs to be confronted with Subramanian to understand the magnitude and scope of the conspiracy, said the CBI counsel.
The CBI said its probe has revealed that Ramkrishna hired Subramanian as consultant in NSE without “following due procedure” and by coercing the HR department of the bourse.
The agency also alleged that Ramkrishna influenced the officials of NSE to facilitate Subramanian in having access to significant decision-making processes of the bourse. Subramanian was also entrusted with the roles and responsibility of a senior executive position standing higher in hierarchy to the heads of departments and one level below the managing director and CEO, reporting directly to her, the agency said.
He was also delegated with substantial power of management akin to the powers granted to the then CEO and managing director, it said.
Alleging direct involvement of Ramkrishna in the NSE co-location case, the CBI has alleged that after Ramkrishna took over as CEO of the NSE in 2016, OPG Securities Ltd, co-accused in the case, was allowed to connect to secondary server of the COLO-TBT Dissemination server for more than 300 trading days, causing it undue gains.
OPG Securities Pvt Ltd was warned repeatedly in 2012 that accessing the secondary server is a violation of the rules and guidelines of the NSE, the agency alleged.
It said that the NSE, however, stopped issuing such warnings to OPG Securities without any justifiable reasons during 2013, when Ramkrishna was at the helm of the bourse.
Ramkrishna’s lawyer denied allegations of her involvement in the scandal and argued that a key accused in the case, Ajay Shah, who built the Chanakya software and was questioned by the CBI on Sunday, has not been arrested.
The case pertains to allegations of market manipulation through unfair, preferential access to certain entities, which had leased co-location space at India’s biggest stock exchange, in 2012-14.
The CBI is now probing “senior functionaries” at the exchange who allegedly played a decisive role in the NSE co-location scheme, according to people in the know. The “beneficiaries” of the scam, who allegedly made windfall gains due to the stock market manipulation scandal, are under the scanner. These include several stockbrokers who allegedly gained “unfair advantage” at the expense of others, said the people.
Besides Ramkrishna and Subramanian, the CBI last month questioned NSE officials including former managing director Ravi Narain.
The spotlight is also on the alleged role of Muralidharan Natarajan, the chief technology officer of NSETECH. According to the CBI, Natarajan was responsible for putting in place the co-location architecture at the NSE and was directly reporting to Ramkrishna when she was at the helm of affairs at the NSE from 2013 to 2016.
The CBI has closely examined the forensic investigation conducted by Deloitte, as asked by the NSE Board, in 2017. The forensic investigation found multiple flaws with the architecture of NSE under the chairmanship of Ramkrishna.
The investigation revealed that the tick-by-tick architecture at the NSE was “prone to manipulation which compromised market fairness and integrity” and did not factor in “principles of air and equitable access”. It also found flaws with the architecture at the NSE for “failing to maintain backups or records for configuration file”.
The investigation also found that certain brokers, including the one booked already by the CBI in 2018 (OPG Securities), “unfairly gained an advantage” at the cost of others by “consistently connecting to more servers”.
According to the people cited earlier, Ramkrishna differed with the findings of the E&Y 2018 report, which said that it was Anand Subramanian who spun the narrative of the Himalayan Yogi.
Ramkrishna has maintained that she was steered by her spiritual guru with whom she had shared confidential information related to the exchange, a stand she had taken before Sebi earlier.
Opposing Ramkrishna’s anticipatory bail plea last week, the CBI had informed a local court that “investigations have also revealed that NSE, headed by Chitra Ramkrishna, gave the trading date and confidential trading data to M/s. Infotech Financial Services Pvt. Ltd. which was misused for developing algorithm for trading products for the securities market participants”.