Home / Markets / NSE board let Ramkrishna resign without action: Sebi
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MUMBAI : The mystery of the “Himalayan yogi" who advised former National Stock Exchange (NSE) boss Chitra Ramkrishna remains unsolved, with the exchange saying it was none other than chief operating officer Anand Subramanian himself -- a claim also corroborated by E&Y which conducted a forensic audit -- while the market regulator did not find the linkage convincing enough.

During the course of investigations, managing director Ramkrishna maintained that in her emails to the third party who went as ‘rigyajursama’, she was taking guidance from a ‘siddha-purusha’ or ‘paramhansa’, her spiritual guide for over 20 years. She asserted that the said person was not Subramanian.

“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 ‘’ was Mr. Subramanian himself," Sebi order stated. NSE sent detailed reports to the Securities and Exchange Board of India in May and July 2018, stating that the ‘yogi’ was Subramanian himself.

“The confidential information of NSE were not disclosed to an unknown entity, but to the Group Operating Officer (GOO), who anyways had access to financial, operational and HR related information about NSE. Further, NSE confirmed that no damage to the market was caused in any manner due to such correspondence and that Ms. Ramkrishna confirmed that the third party had not used confidential information for any personal or monetary gain. NSE also provided detailed responses to Sebi’s questions framed in the May 3, 2018 letter," said Sebi in the order.

Ananta Barua, Sebi whole-time member wrote in the order that the E&Y report, at best, reveals that the unknown person was also well known and in close proximity to Subramanian, but does not give a conclusive finding that Subramanian was in fact the unknown third person.

“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 ‘’ was in fact Noticee no. 6 (Subramanian)," said Sebi in the order.

Saturday’s Sebi order also came down heavily on the NSE board, which was aware that Ramkrishna was passing on confidential information to an unknown third party, but allowed her to resign instead of initiating action against her.

Sebi said this was a failure of checks and balances at India’s largest stock exchange, since at any company, the first level of check is the board, which failed to discharge this fundamental duty. Sebi’s 190-page order found the exchange, Ramakrishna, former chief executive Ravi Narain and others in violation of Sebi rules and levied monetary penalties on them. The irregularities pertain to the appointment of Anand Subramanian, chief operating officer (COO) and advisor to managing director, who was brought in as a consultant and later promoted as COO. Ramkrishna and Subramanian have also been barred from associating with any exchange, depository or market intermediary for three years.

Sebi also highlighted the glaring lack of governance in the leak of NSE’s key financial information to a third person, and how the board did not flag the issue to the regulator.

For any corporate entity, leak of confidential information is a severe misconduct. In a listed entity, leak of confidential price-sensitive information falls under insider trading. For an exchange, which is a first-line regulator, it assumes more gravity.

An E&Y forensic audit submitted in July 2018 highlighted how confidential information including those pertaining to NSE’s five-year financial projections, dividend pay-out ratio, business plans, board meeting agendas and consultations over employee ratings/performance was shared by Ramkrishna with unknown persons. Sebi said she was allowed to exit through resignation despite committing such ‘bizarre misconduct’.

A person who is familiar with the matter said on condition of anonymity that the board was made aware of these issues by the regulator in 2016.

“The board was made aware of these irregularities in 2016 by the regulator, after which the board did its internal investigations. After finding blatant bypassing of rules in appointment of Subramanian, he was sacked. The board was in the process of sacking Ramkrishna owing to irregularities pertaining to Subramanian when she offered to resign. Considering her years of service, the board in its wisdom thought allowing her to exit gracefully was a better option. As far as the order is considered, the ones who have been impacted will take their call," the person said.

The exchange had made a similar case to the regulator; however, Sebi pointed to two grave lapses. One; despite discussing irregularities in Subramanian’s appointment on 21 October 2016, the board did not record it in the minutes, citing confidentiality and sensitivity. Two, even though the email exchanges with the third party were brought to the notice of Ashok Chawla, former chairman of NSE and chairman of nomination and remuneration committee in November 2016, they were shared with the NSE board in a closed-door meeting, and in view of the confidential and sensitive nature of information, it was not recorded in the minutes either.

“It is apparent that NSE was trying to conceal the discussions relating to Subramanian that took place during the board meeting on 21 October, 2016 in the presence of Ramkrishna and also the discussions relating to the said exchange of emails," the Sebi order said.

As per regulatory norms, public interest directors are required to identify important issues that may have significant impact on the functioning of exchanges, which may not be in the interest of market, and report it to the markets regulator. Independent directors on exchanges are called public interest directors.

“Whenever they see any major regulatory lapse in the functioning of the exchange, they have to report to Sebi," the order said, adding this did not happen in this case.

“By permitting Ramkrishna to merely resign and by not taking any action against her, the directors have not acted in the interest of securities market, resulting in failure of their primary responsibilities. Board of directors of any corporate is the directing mind and will of the corporate entity," Sebi added.

Subramanian was appointed bypassing all exchange bye-laws and regulatory norms, and the only person who interviewed him for the job was Ramkrishna, Sebi said. There are no notings in the personnel file of Subramanian in relation to his interview. The position of chief strategic advisor was neither advertised nor was any other person considered for the position. Based on previous experience, Subramanian was found not relevant to the position for which he was appointed by the NSE, Sebi said.

Further there was an exponential rise in his salary. Before being appointed at NSE, he was drawing 15 lakh per annum. Within a span of three years, his salary rose to 4.21 crore. All his appraisals were handled by Ramkrishna alone.


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