NSE colo case: Enforcement Directorate searches premises of four brokers

Four brokers are under Enforcement Directorate (ED) lens in connection with co-location scam, amid fresh revelations about irregularities at the country’s largest stock exchange, the NSE.

On Friday, ED sleuths carried out extensive searches at about nine premises in Delhi and Gurugram, as they suspect these brokers made illicit gains by getting an unfair advantage over the rest of the market.

The federal agency also suspects that they helped some former executives of the NSE benefit from sensitive information allegedly leaked by the exchange’s former managing director and chief executive officer Chitra Ramakrishna (pictured)

Sources in the ED said the action will continue over the weekend, and will cover some more brokers related to the matter.

During searches, it seized about Rs 3.5 crore cash from the premises of one of the four brokers. The sleuths are learnt to have also collected digital records, laptops, computers, and certain crucial documents belonging to these brokers.

The ED had registered a money laundering case to investigate the alleged irregularities in 2019. Multiple agencies including Central Bureau of Investigation (CBI) and income tax department are also probing the case.

The CBI had recently arrested Ramkrishna and former group operating officer Anand Subramanian.

The arrest was made in the case related to the co-location scam, the FIR for which was registered in May 2018. The CBI is probing the alleged improper dissemination of information from the computer servers of the market exchanges to stock brokers.

In the co-location facility offered by the NSE, brokers could place their servers within the stock exchange premises giving them faster access to the markets. It is alleged that some brokers in connivance with insiders abused the algorithm and the co-location facility to make windfall profits.

CBI opposes bail

On Friday the CBI opposed the bail application of Ramkrishna in the co-location case.

The agency told Special Judge Sanjeev Aggarwal that Ramkrishna was “highly influential” and may tamper with the documentary and digital evidence and manipulate the witnesses if released on bail.

It said the nature and gravity of the offence were quite severe and had far-reaching repercussions on financial stability. “The petitioner was a high-ranking official of NSE during the relevant period. Incriminating evidence has already come to the fore against her. The consequences of granting bail will adversely affect the investigation,” the agency told the court in its reply to her application.

The agency added that the examination of other witnesses was underway to unearth the conspiracy related to the co-location setup and the role played by Ramkrishna therein.

“She was looking into the day-to-day affairs and the entire co-location setup that was implemented during her tenure at NSE. There are apprehensions that she may sway the witnesses if enlarged on bail,” it said.

The CBI further said that the case pertained to allegations against senior officials of the NSE where undue gains had been made by trading members by abusing the co-location facility.

“Investigation into the role and responsibility of top officials in facilitating unfair access to the co-location setup is underway,” it said.

The court adjourned the matter for April 21, after the lawyers concerned sought time for arguments.

(With additional inputs from PTI)

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