Chitra Ramkrishna, a former chairperson of India’s largest bourse the National Stock Exchange (NSE) was manipulated by a “Siddha Purusha/Yogi ( an unidentified spiritual guru) and allegedly provided him confidential company information including the NSE’s five-year projections, financial data, dividend ratio, business plans, agenda of board meetings and also consulted him on employee annual appraisals, order by market regulator Sebi said last week.
The investigation also revealed that this “spiritual person” was the reason why Anand Subramanian-an unknown mid-level official at one of Balmer Lawrie’s subsidiaries in Calcutta- suddenly became Ramkrishna’s principal advisor between April 2015 and October 2016.
While Sebi has already indicted Ramkrishna for corporate governance transgressions, the income tax department is now probing possibilities of fund diversion to overseas accounts and possible tax evasion as they found frequent personal and official travel to tax havens like Singapore, Mauritius and Seychelles just before and after Ramkrishna’s exit from NSE
CBI widens probe
The Central Bureau of Investigation is also probing allegations that certain brokers were given preferential access to NSE’s co-location facility at the stock exchange where brokers can buy ‘rack space’ for their servers. This allowed these brokers to log in early and gave them faster access to the exchange’s feed, even if the time advantage was limited to a split second as even that time advantage can result in windfall gains. CBI had booked the owner and promoter of Delhi-based OPG Securities Pvt. Ltd. Sanjay Gupta and others in connection with alleged abuse of NSE co-location facilities to make gains by getting early access to the stock market
“It was alleged that the owner and promoter of said private company abused the server architecture of NSE in conspiracy with unknown officials of NSE. It was also alleged that unknown officials of NSE, Mumbai had provided unfair access to the said company using the co-location facility during the period 2010-2012 that enabled it to login first to the exchange server of Stock Exchange that helped to get the data before any other broker in the market,” the CBI has alleged in the FIR.
In addition, the CBI has also issued a look-out circular against her, in order to prevent her from leaving the country. Similar look-out circulars were also issued for former NSE CEO Ravi Narain and the exchange’s former COO Anand Subramanian.
What does the Sebi order say?
Last week Sebi penalised the NSE and its former MDs and CEOs, Chitra Ramkrishna and Ravi Narain, and others for violating securities contract rules in the case related to the appointment of Subramanian. The regulator fined Ramkrisha Rs 3 crore, the NSE Rs 2 crore. Subramanian was allegedly an accomplice of the said yogi who influenced the decisions of Ramkrishna, thereby benefitting himself by being re-designated as ‘Group Operating Officer and Advisor to MD’, said the Sebi order. He has been asked to cough up Rs 2 crore as the fine. The regulator also barred the NSE from launching any new product for a period of six months. Ramkrishna has been banned for three years from working with any bourse or any firm registered with the regulator as an intermediary.
Point to note: Sebi has identified Subramanian as the spiritual guru and who was hired by Ramkrishna at a newly created post of NSE’s chief strategic officer at an annual salary of Rs 1.38 crore, which was later increased to Rs 4 crore. Prior to joining the NSE, he was a middle-level employee at Balmer Lawrie with no experience in the stock exchanges. “His cost to the company is not less than Rs 5 crore. Chitra is totally dependent on Subramanian and does not do anything without his consultation,” Sebi said. The order said: “Notice no. 1 (Ramkrishna) regards Notice no. 6 (Subramanian) as to be like her spiritual guru whom she has revered and relied upon for the past 20 years”.
According to the order, Ramkrishna shared certain internal confidential information of NSE like organisational structure, dividend scenario, financial results, human resource policies and related issues, response to regulator etc. with the unknown person by addressing her correspondence to an email id [email protected] between 2014 and 2016. “It begs to question as to why Subramanian with no relevant experience, was appointed as Chief Strategic Advisor to the MD & CEO by Ramkrishna when she was already taking all her official advice from the unknown person, admittedly for the past 20 years,” Sebi said, The NSE vide its letter dated November 27, 2018, submitted that its legal advisors had consulted practitioners dealing with human psychology. “As per the opinion of a human psychology expert, Ramkrishna has been exploited by Subramanian by creating another identity in the form of Rigyajursama to guide her to perform her duties according to his wish. Ramkrishna was manipulated by the same man in the form of different identities; one as Subramanian who enjoyed her trust and other as Rigyajursama who had her devotion and dependence,” Sebi said
What is NSE and who is Ramakrishna?
The NSE is the largest derivatives exchange in the world in terms of contracts traded, the second-largest derivatives exchange in the world in terms of currency futures traded. It has a combined market capitalisation of Rs 2,02,95,813 crore. It was the first exchange in India to start fully automated electronic trading.
A chartered accountant by training, Ramkrishna was the MD & CEO of NSE from April 2013 to December 2016. She was one of the five people handpicked to set up NSE from scratch. As MD and CEO of NSE, she made Rs 33 crore before resigning on December 2, 2016. Ramkrishna was the second-highest paid executive in the financial services industry then.
The co-location scam and the Ramkrishna connection
Things started going south in 2015 when a Singapore-based whistle-blower alleged that a Delhi-based member on the NSE was accessing privileged price information by linking to servers and getting access to the least crowded servers. This later came to be known as the co-location scam. The whistleblower also explained the flaws in the co-location systems and alleged that several NSE employees were colluding with these traders.
The SEBI investigation revealed that between 2011 and 2014, a handful of traders managed to get secured preferential access to NSE’s trading servers via its colocation facilities. This is where a trader’s servers are placed in the stock exchange’s data center.
The access included facilities like early logins, and split-second access to the data feed in the exchange, resulting in huge gains by the trader. According to tax officials, these traders made gains to the tune of Rs 50,000 crore, Some traders even got multiple IP addresses in dissemination servers and secondary servers for accessing the data, resulting in market manipulation.
One such broker was OPG securities. With the help of NSE officials, OPG Securities had allegedly abused the server architecture of the NSE and with the help of Chanakya software, it would get a speed advantage and also get connected to the backup servers which had zero loads. It would help OPG Securities to get better and fast access to the market feed compared to other brokers, which then helped it make massive financial gains
SEBI has banned OPG Securities from the market for five years and asked it to cough up Rs 15.57 crore. The case is currently pending with SAT.
Now, these irregularities in the colocation facility happened between 2010 and 2015. Ravi Narain was the MD and CEO until 31 March 2013, and Chitra Ramkrishna, Deputy CEO during that period. Chitra then went on to succeed Narain as MD and CEO and was in office until December 2016 before being forced out. But the NSE Board including Ramakrishna and Narain, surprisingly never employed any policy to map the IP addresses of these traders nor any standard operating procedures on accessibility to the IP addresses.
Their defence? Both said they were unfamiliar with the technology and that they had gone ahead with the advice of functional heads. They also said that they were not involved in the day-to-day operations of the colocation facility, And despite a three-year-long investigation, SEBI on February 10, 2021, only slapped a fine of Rs 25 lakh on Ramakrishna and Narain. It also imposed a fine of Rs 1 crore on NSE.
But, who is the faceless Yogi in this bizarre plot?
The latest Sebi order has nothing to do with the previous scam but focuses on the appointment of Anand Subramanian as NSE’s group operating officer. This soap-opera-like drama was unearthed while investigating the colocation scam, This faceless “yogi” was also responsible for the appointment of Anand Subramanian as group operating officer, who was not known in the industry. Subramanian was VP-Leasing & Repair Services at Transafe Services Ltd, a subsidiary of Balmer & Lawrie, earning a salary of less than Rs 15 lakh per annum. He had “zero exposure to the capital markets” but in 2013 when Ramkrishna was elevated, she offered him the role of a part-time consultant with a salary of Rs 1.68 crore. And within three years he was promoted to Group Operating Officer at a huge salary of Rs 4.21 crore.
He also happened to be the husband of her friend and an NSE staffer. The NSE board turned a blind eye to the appointment on the grounds that he was a consultant, and that the CEO had the authority to appoint him. A much bigger lapse was revealed when a Sebi-ordered audit and a regulatory intervention in October 2013 found out about the presence of an unknown person, who Ramkrishna said was a ‘Himalayan Yogi’ and her spiritual mentor, guiding virtually all her business decisions, including the controversial appointment and promotions of Subramanian.
When asked about him who she calls ‘Siromani’ Ramkrishna claimed that she had met this yogi on the banks of the Ganga 20 years ago. “Subsequently, over the years I have taken his guidance on many personal and professional matters. Along the way, since He would manifest at will and I did not have any locational coordinates I requested Him for a way in which I could seek His guidance whenever I felt the need. Accordingly, He gave me an id on which I could send my requests.”
Ramkrishna had said several senior leaders often seek informal counsel from coaches, mentors or other seniors, which are all purely informal by nature. Similarly, she thought guidance from this spiritual force would help her perform her role better.
She sent emails to an ID, [email protected], sharing sensitive and confidential information about NSE. This Yogi even knew NSE staff members by name and gave detailed directions on who to promote to what position. Subramanian was appointed as per his directions. It was during this time, between 2013 and 2016, that several complaints were made with Sebi to allege governance issues in the appointment of Subramanian, who was also an advisor to Ramakrishna, following which Sebi began a probe, seeking evidence from the key characters, including Ramakrishna.
Ramkrishna also allegedly relied on the guru’s advice on crucial decisions about running the exchange and went on holidays to tax havens such as Seychelles, the probe found.
The order passed by Sebi highlighted the frequent increase in Subramanian’s compensation package without proper appraisal, documentation or with no involvement of the Human Resource (HR) head. Further, the yogi advised Ramkrishna to revise the contract with Subramanian to five days a week only on paper for the sake of emoluments. Sebi noted that in spite of being aware of the irregularities on the appointment of Subramanian, NSE and other officials, including former MD and CEO Ravi Narain did not record the matter in the minutes of the board meeting in the name of confidentiality and sensitive information.
The second grave lapse, according to Sebi, is that even though the email exchanges with the third party were brought to the notice of the then chairman of NSE in November 2016, they were shared with the NSE board in a closed-door meeting, and in view of the confidential and sensitive nature of information, it was not recorded in the minutes either, The audit by E&Y also uncovered several email exchanges between Ramkrishna and the unidentified yogi. In its final report, sometime in October 2016, the audit and the bourse dismissed the information exchange, which the regulator had found to be sensitive, as a routine matter by declaring that Subramanian himself was posing as the Yogi to manipulate Ramkrishna and all was well since both of them were quitting the NSE. Ramakrishna left in December 2016.
It was clearly a whitewash by the exchange in an attempt to keep the scandal under wraps and to allow Ramkrishna a graceful exit. But Sebi in its final order had refused to accept that Subramanian was posing as the yogi.
Multiple people, including those who worked with the top leadership of the exchange at that time and at regulatory and government departments, said it looks almost certain that this Yogi is an imaginary identity created by one or multiple people, including some in key positions to control Ramkrishna, The revelations came as part of a six-year probe that Sebi undertook on complaints about misgovernance and wrongdoings at the NSE. While SEBI maintained that allegations of Subramanian being the ‘yogi’ himself aren’t sustainable, the regulator did agree that ex-GOO is surely an accomplice in the wrongdoings at the exchange
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