While NSE’s former MD and CEO Chitra Ramkrishna and her deputy Anand Subramanian have been blamed for the mismanagement at the stock exchange, it now appears that the then board members of NSE were also made aware of the transgressions.

In September 2016, thenSEBI chairman UK Sinha andWhole-time Member Rajeev Agarwal summoned some NSE board members to SEBI’s Mumbai headquarters and revealed to them the misdeeds of Ramkrishnaand a few SEBI officials. This was documented in the minutes of the meeting, according to top sources. “The board members were apprised of her mismanagement and omission of duty that led to the co-location scam and the illegal appointment of Anand Subramanian,” sources close to SEBI told BusinessLine.

Yet, Ramkrishna was given a clean chit by the NSE board.

She was given a ‘dignified’ exit, praised for her governance of the bourse and handed out nearly ₹50 crore as severance pay and other dues for three years when she headed the NSE.

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No clawback clause

Legal experts say that when senior company officials leave in controversial circumstances, the board is supposed to make them sign an agreement with a ‘clawback’ clause, as was the case when ICICI Bank MD/CEO Chanda Kochhar stepped down. In December 2016, Kochhar was made to execute a ‘claw back agreement’ which entitled ICICI Bank a return of the variable pay paid or deferred variable pay if any gross negligence or integrity breach by Kochhar is determined. The NSE did not do this with Ramkrishna, former SEBI officials say.

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Just two months before Ramkrishna resigned, SEBI had ordered the NSE board to fix individual responsibility for the co-locations scam. Agarwal, who was briefing the NSE board members, told them that glaring facts had come out in the regulator’s investigations by the cross functions team. Agarwal even asked the exchange to get another forensic audit conducted. In less than two months, after this high-power meeting, Agarwal, who was looking into the crucial co-location case as incharge of market regulations department, was ‘not’ given an extension and had to leave SEBI in November 2016. But before Agarwal left, he had told the NSE board that the exchange should deposit profits earned from the co-location trading into an escrow account, the sources said. Under Sinha and Agarwal, SEBI had also ordered a probe into the NSE’s trading architecture designed by IIT-Mumbai and the then head of the investigations, Ashok Jhunjhunwala, had given a scathing report. SEBI had passed the finding of the CFT and IIM to the NSE board. But former SEBI officials say that some NSE board members, who were part of the NSE fact finding committee, gave a clean chit to Ramkrishna arguing vigorously in her favour in SEBI meetings.

While some of the crucial investigations that nailed the NSE and the top management for lapses in the co-location infrastructure were conducted during the time of Sinha and Agarwal, the adjudication process mainly started when the incumbent chairman Ajay Tyagi took charge. Though Ramkrishna was caught passing confidential information, financial details to an unidentified person outside the exchange, no charges of fraud, insider trading or criminal breach of trust have been levelled against her by the exchange or SEBI till date.

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