HFT write-up: NSE’s defamation suit against Moneylife dismissed

The Bombay High Court has dismissed NSE’s defamation suit against Moneylife magazine and its publishers. The NSE had filed the suit after Moneylife had published reports alleging that insiders at the stock exchange gave unfair advantage to certain high-frequency (algorithmic) traders.

Dismissing the ₹100-crore suit that the stock exchange had brought against the magazine, Justice Gautam Patel observed that the magazine had given the exchange an adequate opportunity to defend itself before the articles had been published. The exchange, however, had chosen not to answer the questions from the magazine. Given this, the judge said the NSE cannot use the process of the court to gag the press. The suit had been filed against Moneywise Media Pvt Ltd (which owns Moneylife magazine), editor and publisher Debashis Basu and Managing Editor Sucheta Dalal, who had written the reports in question. Dismissing the suit, Justice Patel said by not responding to the journalist’s questions, NSE had either shown arrogance or there was an element of truth in the allegations. The court also imposed a ₹50-lakh penalty on NSE, of which ₹3 lakh will be paid to Basu and Dalal and the remaining given as charity to Tata Memorial Hospital and Masina Hospital in Mumbai.

On June 19, Moneylife published a letter it received from a whistleblower — who works in the technology team of a Singapore-based hedge fund — alleging that the market manipulation taking place at the exchange allowed “certain vested brokers to get market price information ahead of the rest of the market.” A follow-up report by the magazine’s Managing Editor Sucheta Dalal in early July alleged that the senior management at the NSE profited from allowing certain high-frequency traders to play the system while capital markets regulator SEBI has not acted on the whistleblower’s allegations either.

Speaking to BusinessLine , Bapoo Malcolm, who represented Moneywise Media, termed the dismissal a victory for the media, adding that this judgment makes the case for increased transparency at public institution, such as a stock exchange. Basu added that the magazine welcomed the court’s decision.

A spokesperson for the NSE said: “Since we have not received the final copy (of the order) from the court, we are not in a position to comment further. However, it goes without saying that, whatever is the court order, NSE will respect that.”

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