NSE scam: SEBI order raises more questions

The February 11, 2022, order of SEBI on the National Stock Exchange (NSE) looked into the appointment of Anand Subramanian as Chief Strategic Advisor and his re-designation as Group Operating Officer and Advisor to MD, and the sharing of confidential information with unknown people by Chitra Ramkrishna, the MD of NSE. The SEBI order clearly indicts Chitra Ramkrishna and Ravi Narain, and former Board members, of NSE for violation of securities regulations.

Since the tenure of Ravi Narain as MD, and continuing with Chitra Ramkrishna, hubris has been the downfall of corporate governance at NSE. Financial success and near-monopoly meant NSE did not bother about the basics of corporate governance, and, at times, even cocking a snook at the regulators.

Read also: How Ravi Narain built the NSE, and then lost his grip

Though SEBI began investigations in 2016, it has taken six years to arrive at this order. However, SEBI’s order raises more questions than it answers.

From the SEBI order it is clear that everyone--the Board, the shareholders, the executive team members--at NSE was sleeping at the wheel and there were external influences, of a purported yogi, which were driving many of key decisions taken by the MD and confidential information was being shared with someone outside of the exchange. Even E &Y, in its forensic reports and upon examination of the matter has concluded that the yogi was none other than Anand Subramanian himself. That SEBI could not get into the identity of the yogi is a travesty. In the order, it looks like SEBI officials have created the metaverse for NSE.

The penalties levied by the SEBI order are laughably low for the magnitude of violations of securities law, and seem to be a fig leaf to let NSE and other external influencers off the hook.

The questions that remain unanswered are:

*How is the appointment of Anand Subramanian related to the co-location scam where an external whistle-blower was the first to flag the scam?

*How could the COO have been appointed without the Nomination and Remuneration Committee (NRC) knowing the candidate's past?

*Why did none of the CXOs raise the issue of the COO-MD nexus as a whistle-blower?

*What was the identity of the yogi or external influencer?

*Are processes and practices currently in place at NSE so that such an event doesn’t re-occur at such an important market infrastructure?

*The SEBI order has done more damage to its own credibility and many questions have remained unanswered.

(The author is the founder and MD of InGovern Research, a corporate governance advisory firm.)