NSE co-location scam: Madras HC issues notices to SEBI, five others

KR Srivats New Delhi | Updated on October 10, 2019 Published on October 10, 2019

PIL by Chennai-based society had accused SEBI of failing in its responsibilities

Acting on a PIL in the National Stock Exchange (NSE)co-location scam, the Madras High Court (MHC) has issued notices to the Securities and Exchange Board of India (SEBI), the Ministry of Corporate Affairs (MCA), the Central Bureau of Investigation (CBI), the Serious Fund Investigation Office (SFIO), the Enforcement Directorate (ED), the BB Financial Intelligence Unit (FIU) and the NSE.

The notices were issued after the public interest litigation (PIL) filed by Chennai Financial Markets and Accountability (CFMA), a registered society in the NSE case, was admitted by the court.

The Madras High Court has directed the noticees to respond by November 11.

The CFMA had, in the writ petition, sought direction from the court to the statutory respondents (SEBI, the CBI, the MCA, the FIU and the ED) to take action against the misdemeanours and wrongdoings committed by the NSE in the NSE co-location scandal.

CFMA, a society registered under the Tamil Nadu Societies Registration Act, had submitted that it was aggrieved over the inaction of the statutory respondents, especially SEBI, for having taken no action in right earnest.

‘Little effective steps’

According to the PIL, SEBI has not taken any effective steps to unearth the massive NSE scam, one of the biggest financial frauds to ever take place.

The regulator failed to discharge its statutory responsibility, the PIL had alleged.

Last month, the Securities Appellate Tribunal (SAT) had asked the NSE and its ex-officials, including the former CEO Chitra Ramkrishna, to file their rejoinders within four weeks in their plea against SEBI that penalised them in the co-location case.

The co-location case dates back to 2015 when a whistleblower wrote to SEBI alleging that the NSE was giving a few high-frequency traders and brokers preferential access to its trading platform, which benefited both the parties at the cost of others.

The whistleblower had alleged that some brokers had figured out the way to manipulate the system by becoming the first one to connect to the server — preferably the one which was the fastest.

Published on October 10, 2019
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