CBI to question SEBI officials on regulatory action against Chitra, NSE

PALAK SHAH | Updated on: Feb 20, 2022

FILE PHOTO: The logo of the Securities and Exchange Board of India (SEBI) is pictured on the premises of its headquarters in Mumbai, India March 1, 2017. REUTERS/Shailesh Andrade/File Photo | Photo Credit: SHAILESH ANDRADE

To examine why the regultor failed to invoke charges of fraud and pursue the matter as a likely criminal conspiracy

After questioning Chitra Ramkrishna and other former executives of the National Stock Exchange (NSE), the Central Bureau of Investigation (CBI) is set to examine key SEBI officials in connection with the co-location scam.

The investigators are examining why SEBI failed to invoke any charges of fraud and pursue the matter as a likely criminal conspiracy, despite making strong observations in its recent order.

SEBI’s order, released last week, revealed how NSE’s former MD and CEO Chitra Ramkrishna was sharing confidential data and information of the exchange with an unidentified person, who she claimed was a spiritual yogi dwelling in the Himalayas.

The CBI had earlier registered an FIR (first information report) against unknown SEBI officials for allegedly conspiring with the accused. Now, the fact that SEBI has let off Ramkrishna with just a rap on the knuckles, without invoking serious charges and possibility of the regulator having more emails between her with the ‘yogi’ has given the CBI more ammunition to question SEBI officials, sources said. The CBI has been probing the co-location scam since 2018 but had not made any headway as digital data that could give further cues was hard to come by. But now SEBI itself has said that digital data may have been destroyed by the NSE. The SEBI order observes that Ramkrishna and Subramanian’s laptop was disposed of by the NSE as e-waste. Destruction of evidence calls for a complaint under Section 201 of the Indian Penal Code. But SEBI failed to file any police complaint for it. The SEBI order says “only the desktops assigned to Ramkrishna and Subramanian were imaged / checked and the laptops assigned to them were not available for forensic imaging as they were disposed as e-waste.”

Leaking of confidential information by Ramkrishna during the time when she was the MD and CEO of NSE falls under the ambit of Fraudulent and Unfair Trade Practices (FUTP). But SEBI has not pressed any charges of fraud. The probe shows that NSE and its board could have had knowledge of Ramkrishna’s misdoings.

Further, the investigators believe that SEBI has revealed only selected emails in its order.  

A legal expert said: ”SEBI’s order viewed from angle of acts of criminality points to IPC offences like Section 34 (Common Intent), Section 107 IPC (Abetment), Section 187 of IPC (Omission to assist public servant when bound by law to give assistance), Section 191 (Giving false evidence), Section 201 of (Causing disappearance of evidence of offence), Section 202 (Intentional omission to give information of offence by person bound to inform) Section 408 (Criminal Breach of Trust), read with Section 120B (Criminal Conspiracy). In addition to offences under IPC, offences under the Companies Act, 2013 like Section 447 of the Companies Act (Fraud) are also attracted. SEBI has powers to file criminal complaint under Section 23M of SCRA Act, or Section 24 of SEBI Act with EOW, ED and CBI for getting the criminality investigated.”

Published on February 20, 2022
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