The Securities and Exchange Board of India (SEBI) has penalised the National Stock Exchange (NSE), and its former CEOs Chitra Ramkrishna and Ravi Narain, over violations in security contract rules and lapses in the hiring procedure for senior-level appointments.
A fine of Rs 3 crore has been imposed on Ramkrishna, Rs 2 crore each on the NSE, Narain, and former group operating officer and advisor to the MD Anand Subramanian, as well as Rs 6 lakh on V R Narasimhan, who had been serving as the chief regulatory officer and chief compliance officer.
As per a SEBI order dated Friday, 11 February, Chitra Ramkrishna, during her tenure as CEO and managing director (MD), had allowed her decisions to be swayed by a spiritual force. As a fallout, Subramanian, who had allegedly been an associate of the 'yogi,' had drawn unjustified gains under Ramkrishna's ascendancy.
The details of the arrangement have stirred a controversy.
What are the charges against former CEO Ramkrishna? Who is the spiritual entity who allegedly influenced her decisions? What does SEBI say? Here's what we know.
Why Did SEBI Penalise NSE? Who's the 'Yogi' Ex-CEO Ramakrishna 'Consulted'?
1. SEBI's Charges Against Ramkrishna
Ramkrishna, who had served as the CEO and MD of NSE between 2013-16, has submitted that she had sought guidance from a spiritual person on many personal and professional matters.
The former NSE chief had shared internal confidential information of the stock exchange, such as the organisational structure, dividend scenario, financial results, human resource policies, etc, with the unknown person through email.
As per SEBI, Anand Subramanian, who was an accomplice of the yogi, was appointed to his post as group operating officer without due procedure, even as he lacked relevant experience.
Subramanian had allegedly been the only candidate called for the interview to the position of the chief strategic advisor, and no pre-employment documents of his were handed over to the HR for recruitment.
Further, due to the spiritual entity's influence on Ramkrishna, Subramanian was given an atypically high pay of Rs 4 crore per annum – more than the compensation of most seniors at NSE, as per SEBI.
“Hence, there appears to be a glaring conspiracy of a money-making scheme that involves Ramkrishna and Subramanian with the unknown person, by which Ramkrishna would increase the compensation granted to Subramanian and Subramanian would then pay the unknown person from such increased compensation,” SEBI has said.
Expand2. What Does SEBI Order Say?
"I note that Noticee no. 1 (Ramkrishna) has submitted that for the past 20 years she has sought guidance from the unknown person on many personal and professional matters and therefore, it may suffice to say that Noticee no. 1 holds the unknown person in very high regard and is influenced significantly by the unknown person," the SEBI order states.
"Hence, the preferential treatment towards Noticee no.6 (Subramanian) becomes apparent from the above that Noticee no. 1 regards Noticee no. 6 as to be like her spiritual guru whom she has revered and relied upon for the past 20 years. With the aforesaid in mind, it is not surprising to see the frequent, arbitrary, and disproportionate increase in compensation granted to Noticee no. 6 by the Noticee no. 1 when there was no evidence of any performance evaluation being done for Noticee no. 6 and nor was there any evidence to satisfy the rating of A+ given to Noticee no. 6 for giving such high increments."
SEBI Order"It also begs to question as to why Noticee no. 6 (Subramanian), with no relevant experience, was appointed as Chief Strategic Advisor to the MD and CEO by Noticee no. 1 when she was already taking all her official advice from the unknown person, admittedly for the past 20 years," the order states.
Subramanian first served as the chief strategic advisor and was re-designated as group operating officer. He was later appointed as the advisor to MD and CEO of NSE from April 2015 to October 2016.
"Chitra is totally dependent on Subramanian and does not do anything without his consultation,” the market regulator notes in its order.
Expand3. Who Is the 'Unknown' Spiritual Being?
Former NSE CEO Ramkrishna has submitted that the unknown person is a spiritual force having no physical persona.
"I met Him for the first time on the banks of the Ganges nearly 20 years ago directly. Subsequently, over the years I have taken his guidance on many personal and professional matters. Along the way, since He would manifest at will and I did not have any locational co-ordinates I requested Him for a way in which I could seek His guidance whenever I felt the need. Accordingly, He gave me an id on which I could send my requests."
CEO Ramkrishna, as quoted be SEBIThe SEBI order states that “The unknown person according to Ramkrishna was a spiritual force that could manifest itself anywhere it wanted and did not have any physical or locational co-ordinates and largely dwelt in the Himalayan ranges,” the SEBI order said.
"Noticee no. 1 has made incorrect and misleading submission before NSE that the unknown person was a ‘siddha-purusha’ or ‘paramhansa’ who did not have physical persona and could materialise at will," it added.
“Ramkrishna stated that the third person was not Mr. Subramanian; (but) the results of the forensic investigation conducted by EY (asked by Sebi and commissioned by NSE) concluded that the person using the email id ‘rigyajursama@outlook.com’ was Mr. Subramanian himself," the Sebi order stated, as quoted by Mint.
The order further stated that no confidential information of NSE was disclosed to an unknown entity, but to the Group Operating Officer (GOO), who anyway had access to financial, operational and HR related information about NSE.
“I find that there is no conclusive evidence or finding from the E&Y Report or the documents before me to prove that the unknown person who used the email id ‘rigyajursama@outlook.com’ was in fact Noticee no. 6 (Subramanian)," the SEBI said.
Expand4. What Penalties Have Been Imposed by SEBI?
In addition to the heavy fines imposed on the NSE officials, the market regulator has also barred stock exchange from launching any new product for a period of six months.
Ramkrishna and Subramanian have been restrained from associating with any market infrastructure institution or any intermediary registered with SEBI for a period of three years, while Narain has been curbed from the same for two years.
The government body has also directed the NSE to forfeit Ramkrishna's excess leave encashment of Rs 1.54 crore and the deferred bonus of Rs 2.83 crore, and has asked for it to be deposited to its Investor Protection Fund Trust within six days.
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Expand
SEBI's Charges Against Ramkrishna
Ramkrishna, who had served as the CEO and MD of NSE between 2013-16, has submitted that she had sought guidance from a spiritual person on many personal and professional matters.
The former NSE chief had shared internal confidential information of the stock exchange, such as the organisational structure, dividend scenario, financial results, human resource policies, etc, with the unknown person through email.
As per SEBI, Anand Subramanian, who was an accomplice of the yogi, was appointed to his post as group operating officer without due procedure, even as he lacked relevant experience.
Subramanian had allegedly been the only candidate called for the interview to the position of the chief strategic advisor, and no pre-employment documents of his were handed over to the HR for recruitment.
Further, due to the spiritual entity's influence on Ramkrishna, Subramanian was given an atypically high pay of Rs 4 crore per annum – more than the compensation of most seniors at NSE, as per SEBI.
“Hence, there appears to be a glaring conspiracy of a money-making scheme that involves Ramkrishna and Subramanian with the unknown person, by which Ramkrishna would increase the compensation granted to Subramanian and Subramanian would then pay the unknown person from such increased compensation,” SEBI has said.
What Does SEBI Order Say?
"I note that Noticee no. 1 (Ramkrishna) has submitted that for the past 20 years she has sought guidance from the unknown person on many personal and professional matters and therefore, it may suffice to say that Noticee no. 1 holds the unknown person in very high regard and is influenced significantly by the unknown person," the SEBI order states.
"Hence, the preferential treatment towards Noticee no.6 (Subramanian) becomes apparent from the above that Noticee no. 1 regards Noticee no. 6 as to be like her spiritual guru whom she has revered and relied upon for the past 20 years. With the aforesaid in mind, it is not surprising to see the frequent, arbitrary, and disproportionate increase in compensation granted to Noticee no. 6 by the Noticee no. 1 when there was no evidence of any performance evaluation being done for Noticee no. 6 and nor was there any evidence to satisfy the rating of A+ given to Noticee no. 6 for giving such high increments."SEBI Order
"It also begs to question as to why Noticee no. 6 (Subramanian), with no relevant experience, was appointed as Chief Strategic Advisor to the MD and CEO by Noticee no. 1 when she was already taking all her official advice from the unknown person, admittedly for the past 20 years," the order states.
Subramanian first served as the chief strategic advisor and was re-designated as group operating officer. He was later appointed as the advisor to MD and CEO of NSE from April 2015 to October 2016.
"Chitra is totally dependent on Subramanian and does not do anything without his consultation,” the market regulator notes in its order.
Who Is the 'Unknown' Spiritual Being?
Former NSE CEO Ramkrishna has submitted that the unknown person is a spiritual force having no physical persona.
"I met Him for the first time on the banks of the Ganges nearly 20 years ago directly. Subsequently, over the years I have taken his guidance on many personal and professional matters. Along the way, since He would manifest at will and I did not have any locational co-ordinates I requested Him for a way in which I could seek His guidance whenever I felt the need. Accordingly, He gave me an id on which I could send my requests."CEO Ramkrishna, as quoted be SEBI
The SEBI order states that “The unknown person according to Ramkrishna was a spiritual force that could manifest itself anywhere it wanted and did not have any physical or locational co-ordinates and largely dwelt in the Himalayan ranges,” the SEBI order said.
"Noticee no. 1 has made incorrect and misleading submission before NSE that the unknown person was a ‘siddha-purusha’ or ‘paramhansa’ who did not have physical persona and could materialise at will," it added.
“Ramkrishna stated that the third person was not Mr. Subramanian; (but) the results of the forensic investigation conducted by EY (asked by Sebi and commissioned by NSE) concluded that the person using the email id ‘rigyajursama@outlook.com’ was Mr. Subramanian himself," the Sebi order stated, as quoted by Mint.
The order further stated that no confidential information of NSE was disclosed to an unknown entity, but to the Group Operating Officer (GOO), who anyway had access to financial, operational and HR related information about NSE.
“I find that there is no conclusive evidence or finding from the E&Y Report or the documents before me to prove that the unknown person who used the email id ‘rigyajursama@outlook.com’ was in fact Noticee no. 6 (Subramanian)," the SEBI said.
What Penalties Have Been Imposed by SEBI?
In addition to the heavy fines imposed on the NSE officials, the market regulator has also barred stock exchange from launching any new product for a period of six months.
Ramkrishna and Subramanian have been restrained from associating with any market infrastructure institution or any intermediary registered with SEBI for a period of three years, while Narain has been curbed from the same for two years.
The government body has also directed the NSE to forfeit Ramkrishna's excess leave encashment of Rs 1.54 crore and the deferred bonus of Rs 2.83 crore, and has asked for it to be deposited to its Investor Protection Fund Trust within six days.
(At The Quint, we are answerable only to our audience. Play an active role in shaping our journalism by becoming a member. Because the truth is worth it.)