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The CBI has registered an FIR against SEBI officials, the National Stock Exchange (NSE) and Sanjay Gupta, the owner of Delhi-based brokerage company OPG Securities, in the NSE co-location case. The case alleges that NSE’s trading architecture was abused by brokers to gain preferential access to systems and data.
While NSE and OPG Securities are being probed for direct connivance and manipulation of trading systems, SEBI officials are being probed as it has come to light that Gupta bribed them to get favourable regulatory orders, a source told BusinessLine . The CBI has registered cases under criminal conspiracy, the Prevention of Corruption Act and Section 66 of the IT Act.
An email sent to SEBI, NSE, OPG Securities and the CBI remained unanswered.
The NSE and SEBI officials have not been named in the case registered by the CBI. But the central probe agency has named Aman Kakrady (brother-in-law of Sanjay Gupta) and one Ajay Narottam Shah (who facilitated Gupta by developing and providing Algo software Chankaya).
The CBI is probing a complaint of abuse of the tick-by-tick architecture of the NSE server, the source said. It is alleged that exchange employees may have deleted important mails, texts and logs with the intention to destroy electronic evidence.
Further, the case states that Shah, who collected NSE trade data in 2005-06 on the pretext of research activity, developed the software that was sold to select brokers, including OPG Securities.
Trading activity by the broker and his associates was being conducted from Dubai, Ghana, Singapore, China and Hong Kong through OPG Securities, the CBI states.
The scam first came to light when a whistle-blower alerted SEBI in 2015 to the rigging of high-frequency trading systems at NSE. The alleged manipulation occurred between 2010 and 2014. The while-blower highlighted the full modus-operandi through several letters it wrote to SEBI. At least a two year delay by the market regulator in probing the allegations led the CBI to swing into action. NSE has so far denied these allegations. SEBI also had initiated a probe but it has not arrived at an conclusion.
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