The Central Bureau of Investigation (CBI) arrested the Managing Director of Delhi-based OPG Securities Pvt. Ltd. Sanjay Gupta in the National Stock Exchange (NSE) co-location case, officials said Wednesday, 22 June.
The brokers, involved in this scam, allegedly abused the facility to make gains by getting early access to the stock market.
The agency had already arrested former CEO and Managing Director of NSE Chitra Ramkrishna and former Group Operating Officer of the market Anand Subramanian.
Gupta was arrested four years after the CBI filed an FIR against him for alleged preferential access of the market through multiple IDs and secondary servers called co-location facility, officials said on Wednesday.
He was "evasive" and tried to "mislead the investigation" resulting in his arrest, officials said.
The CBI in 2018 had registered a case against him and his brother-in-law Aman Kakrady, Ajay Narotta Shah and some unknown officials of market regulator Securities and Exchange Board of India (SEBI) and the NSE.
What Did Sanjay Gupta Do?
In its latest probe, the CBI revealed that he allegedly attempted to destroy evidence and bribe the investigating officers of the case. He is said to have approached a “syndicate” to influence SEBI officials.
OPG Securities, which Gupta owns and promotes, consistently allegedly logged in first on selected Tick-by-Tick servers of the NSE for four years on most of the trading days between 2010 and 2014. It also had access to servers that with better hardware.
A tick is a minimum change in security prices. It is alleged that Tick-by-Tick architecture used by the NSE was manipulated by brokers to remain ahead of peers in trading hours.
Deloittee Touche Thmatsu, which conducted a forensic review of the NSE's Co-location facility, found that OPG Securities was the first in most cases during trading sessions.
Gupta also had hawala deals, cash payments for multi-crore property purchases and undisclosed foreign transactions, according to MoneyControl.
I-T Dept, revealed that through an entity called Richr Business services, he operated an international arbitrage and trading business.
The agency was also investigating unidentified officials of the SEBI and NSE Mumbai and other ‘unknown’ people.
"It was alleged that unknown officials of NSE, Mumbai had provided unfair access to said company using the co-location facility during the period 2010-2012 that enabled it to login first to the exchange server of Stock Exchange that helped to get the data before any other broker in the market," the CBI said in its FIR.
Last month, a search operation spanning over 12 premises across cities including Mumbai, Delhi, and Kolkata was launched by the Central Bureau of Investigation (CBI) in connection with the case.
The Backdrop
The CBI has been probing the case since May 2018.
The SEBI, in May this year, had imposed a fine of Rs 3 crore on Ramkrishna, following the market regulator finding that she allegedly shared vital inputs about the NSE with a mysterious Himalayan yogi, including information on "organisational structure, dividend scenario, financial results, human resource policies and related issues, response to regulator".
On 1 April 2013, Ramkrishna became the CEO and MD of NSE. She brought Subramanian to the NSE as her advisor. Subramanian was made the Chief Strategic Advisor of NSE. He served at this post between 2013 and 2015 before being made Group Operations Officer and Advisor to the MD between 2015 and 2016, despite having no exposure to the capital market.
Previously working as a mid-level manager in Balmer and Lawrie, he had seen his salary increase from Rs 15 lakh to Rs 1.68 crore annually, and then to Rs 4.21 crore.
(With inputs from PTI, ANI and MoneyControl.)
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