An Incredible Story of a Telepathic Conman
The Capital Market Watchdog, SEBI, has uncovered a bizarre tale of how a former chairperson of the country’s largest bourse – the National Stock Exchange – was manipulated by a “Siddha Purusha/Yogi i.e. a Paramahansa who maybe largely dwelling in the Himalayan ranges”.
This is the strange tale of mysticism-meets-technology starring Chitra Ramakrishna – the disgraced chief of the NSE who left the bourses under a cloud in 2016 amid a litany of charges surrounding an algo trading scam that was made possible because of shenanigans at the bourse where select players received market price information faster than the rest and were able to front run the market.
An investigation into the affairs of the NSE under Ramakrishna (nicknamed “Queen of the Bourses”) revealed something more sinister. Ramakrishna had been sharing business plans with such so-called Yogi.
She had been providing him masses of information including the NSE’s five year projections, financial data, dividend ratio, business plans, agenda of board meetings and also consulted him on employee annual appraisals.
The 190-page final order handed down by SEBI’s whole-time member Ananta Barua uncovered a sordid tale of voodoo-like manipulation of the chief of one of the largest bourses in the world.
Ramakrishna, the former MD and CEO of NSE informed investigators that this “spiritual force” had been guiding her actions for years in personal and professional matters.
In response to the questions, Ramakrishna had said about this spiritual manifestation that “spiritual powers do not require them to have any such physical coordinates and would manifest at will.”
The situation became even more surreal when the investigation revealed that this “spiritual person” was the underlying reason why a mid-level official at Balmer Lawrie’s subsidiary in Calcutta – Anand Subramanian – suddenly surfaced at SEBI and became Ramakrishna’s principal advisor between April 2015 and October 2016, just before she resigned from NSE.
Subramanian worked at Transafe Services Ltd., a subsidiary of Balmer & Lawrie, earning a salary of less than Rs. 15 lakh per annum — and he had “zero exposure to the capital markets”. His fortunes changed dramatically in April 2013 when Ramakrishna offered him the role of a part-time consultant working four days a week at a salary of Rs. 1.68 crore. He rapelled up quickly emerging as a chief strategic advisor and received an annual compensation of Rs. 4.21 crore in a matter of 3 years.
The post of consultant had never been advertised; there was no record of his interview and there were no employment records with the bourse’s HR department. Recently, during the course of investigation by SEBI this fact has been confirmed that there have been irregularities in the appointment of the chief strategic advisor and the appointment was made without following due process.
By August 2015, Subramanian was attending all board meetings of the NSE. In June 2016, he was authorised to form a subsidiary of NSE to set up a stock exchange at the International Financial Services Centre(IFSC) at GIFT City. Soon, all the functional heads were reporting to Subramanian who was re-designated as group operating officer and advisor to the MD and CEO. No wonder why he is being termed as a “modern-day Rasputin-like figure”.
The investigation has brought to light that several influential people at the bourse including Ravi Narain – Ramakrishna’s predecessor – were aware of this mysterious yogi and his communications with the NSE chief. Narain was the MD of the bourse from April 1994 to March 2013. Later, he became the vice-chairman of NSE and remained in that position till June 2017.
The NSE board and the other notices named in the order — president and company secretary J. Ravichandran, and chief regulatory officer V.R. Narasimhan — also knew about the dark truths surrounding this unknown spiritual person but took a “conscious decision…not to report the matter to SEBI and (chose to)…..keep the matter under wraps.”
The market regulator has imposed a fine of Rs. 3 crore on Ramakrishna, Rs. 2 crore each on NSE, Ravi Narain and Subramanian, and Rs. 6 lakh on V.R. Narasimhan.
Further, Ramakrishna and Subramanian have been restrained from associating with any market infrastructure institution or any intermediary registered with SEBI for 3 years. A similar restriction has been slapped on Narain for 2 years.
The Income Tax Department also raided the premises of Ramakrishna and Subramanian in Mumbai and Chennai as a part of the tax evasion investigation against them.
The Central Bureau of Investigation (CBI) has also interrogated Chitra Ramakrishna over the alleged misuse of the co-location facility in the NSE. It had come to light after an anonymous whistleblower wrote letters to SEBI and the finance ministry. Look out circulars were issued against Ramakrishna, Subramanian and Ravi Narain to prevent them from leaving the country. The owner and promoter of Delhi-based OPG Securities, Sanjay Gupta and others were booked by the central probe agency for abusing the server architecture of NSE to make gains by getting early access to the stock market.
In the high frequency algorithmic trading on the NSE, an edge of a few seconds to a stock broker in a trade can make a huge difference. It has emerged that Gupta was the first one to log-in, in 90% of the cases which prompted murmurs in the stock broker market and resulted in the load balancer being issued by NSE. Gupta managed the data centre staff of the NSE to get connected to the backup servers which were with zero load and provided far better and faster access of Market feed to OPG Securities in comparison to other brokers.
However, the steps undertaken by the Market regulator against this blatant breach of security and privacy are being considered inadequate. The Market Regulators cannot avoid responsibility for the lack of due diligence and supervision because of which the capital market and one of the world’s largest exchange markets, NSE is in a topsy-turvy situation.
The CBI has arrested Anand Subramanian following sustained questioning for 3 days. He was found evasive in responses to the sleuths which had prompted the CBI to examine him in custody.
The CBI also arrested Ramakrishna on 6th March in Delhi. She was later lodged in lockup at the CBI headquarters. A special CBI court had also rejected her anticipatory bail application. It is apprehended that the scam can be of an unimaginable magnitude.
The Enforcement Directorate recently recorded the statement of Ramkrishna, who is currently incarcerated in Delhi’s Tihar jail, as part of a money laundering inquiry involving her and her accomplices.
The ED’s money laundering investigation concerns alleged anomalies in the NSE co-location case, and it has undertaken raids in the matter, including at the offices of the brokers involved.
The CBI needs to find out the entire ramifications of the transactions in question, dig out the voluminous digital evidence and find out the role of other players in a case where the institutional investors, foreign institutional investors and honest retail investors have been swindled. It is also to be noted that the proceedings of the Regulator and its role in the entire anarchy is not above suspicion. Recently, SEBI has refused to disclose its inspection reports since 2013 under RTI Act citing that the information sought by the RTI Activist, Subhash Agarwal pertains to its internal functioning; the disclosure of which may hamper decision making in its supervisory and regulatory role which further heightens the whiff.
The Securities and Exchange Board of India (SEBI) has constituted a committee to review governance requirements at market infrastructure institutions (MII) such as stock exchanges in the aftermath of the country’s major bourse’s algorithmic trading scandal.
These flagrant breach of security and privacy coupled with the dubious conduct of regulatory bodies can have a catastrophic impact on the reputation of the capital market of the country which may force the investors to find new destinations for their investments.
It’s truly “A Mad World My Master.”
Curated By: Soumya Bhattacharya
(Soumya Bhattacharya is a 1st year student pursuing B.Com(H) at St. Xavier’s College (Autonomous), Kolkata and a Research Analyst of the Xavier’s Finance Community.)