Umesh Jain, former Chief Technology Officer (CTO) at the NSE who has been issued a show-cause notice by SEBI for not cooperating in the investigations into alleged algo manipulation case, has told the market regulator that he was never contacted by anyone probing the matter.

SEBI had issued a show-cause notice to 14 of NSE’s key officials on May 22 this year. While 12 have filed for consent, Jain is fighting allegations against him and has not opted for consent settlement with SEBI. Others including former board members and chief executives, have agreed for a settlement.

Allegations of giving preferential access to stock brokers and manipulation of algo trading systems at NSE first surfaced in January 2015. This was followed by allegations of misuse of ‘dark fibre’ trading links, the speed-highway for trade order execution, by a whistleblower.

Jain, while replying to a show-cause from SEBI, said question of not cooperating with investigations does not arise as nobody among those probing the matter ever contacted him. Jain worked with NSE between September 2012 and June 2015. BusinessLine has reviewed Jain’s reply along with the show-cause notice and other documents pertaining to the case.

Two investigations

Jain’s response to SEBI is significant as notably two major investigations have taken place into the matter so far. It includes one by Deloitte, which was appointed by the NSE on the directions of SEBI, and another by the regulator’s own Technical Advisory Committee (TAC). Both have submitted their final reports. SEBI’s show-cause against Jain for non-cooperation with investigations is partly based on these reports.

Replying to BusinessLine , Deloitte said, “Our engagements are carried out in accordance with our contractual terms and as per consistent policy, we do not comment on matters that are proprietary or confidential to a client.” A source close to Deloitte said that their scope of work did not cover it.

Jain has also refuted three other charges of SEBI, that he did not act on complaint, that there was dereliction of duty and collusion on his part. His reply, which is bereft of legal language, says he had submitted his report explaining the technology at the NSE to his bosses within weeks after he was first shown the whistleblower’s letter, in February 2015. Jain has told SEBI that allegations with regard to algo manipulation in NSE related to a period before he joined it and those with regard to dark-fibre network after he quit.

When contacted Jain said he did not want to comment to media. An email sent to SEBI did not receive any response.

Related Topics
comment COMMENT NOW