Former and current NSE executives opt for consent mode to settle co-location case
, ET Bureau|
Updated: Sep 26, 2017, 12.02 AM IST
High-profile current and former top executives of National Stock Exchange (NSE) have opted to settle the co-location case through the consent mechanism with the capital market regulator the Securities and Exchange Board of India.
Former board members and chief executives Ravi Narain and Chitra Ramkrishna and current chief of business development Ravi Varanasi are some of the people who have applied for settlement, people close to the situation said.
Consent orders are similar to an out-of-court settlement in securities law parlance. It is a negotiated settlement between the capital markets regulator and an entity by paying a penalty or by undergoing a voluntary ban from the stock markets.
In May, Sebi issued show-cause notices to the exchange and its 14 officials — both former and existing — asking them to explain alleged irregularities in the exchange.
The regulator alleged that NSE gave preferential access to a few high-frequency traders and brokers to its trading platform.
In July, soon after Vikram Limaye took charge as the CEO of NSE, the exchange filed its consent application with Sebi.
Sources familiar with the development said 12 out of the 14 executives have filed their consent applications to settle the ongoing probe into high-frequency trades.
Umesh Jain, former chief of technology, and Anand Subramanian, former chief operating officer, have not opted for such a move.
“I have filed my response to Sebi’s show-cause notice. I have not filed for the consent process,” Jain told ET, without giving details why he has chosen to stay out of the consent process. Subramanian couldn’t be reached for comments.
A senior regulatory official said Jain’s decision not to go for consent will be crucial in this case.
“It is interesting to note that the technology head is taking a different approach from the rest. His statement would be critical,” the official said.
A source close to NSE said the exchange has left the decision of the settlement in this case to the individuals. “Each employee is free to take his stand. It is their choice whatever path they want to choose. What happens to the employee process doesn’t have a bearing on NSE’s consent process.”
NSE will bear all legal expenses incurred by the employees on the co-location case. Different law firms are assisting both NSE and the employees.
“NSE's consent application and the employees’ application are both parallel processes that are going on,” the NSE source said.
“NSE will be supportive of its employees unless there is evidence of any wrongdoing. If the employee is at fault, he or she will bear the cost.” At present, 6 out of the 14 opting for consent with Sebi are still working with NSE.
Sandeep Parekh, former executive director of Sebi and now founder of Finsec Law Advisors, said the outcome of the consent mechanism may not have an impact on the case involving two former NSE executives who have chosen to fight it out.
“The consent process and the penalty process are independent and information given under one is not shared with the other. Even otherwise, unless there are glaring inconsistencies between the two, they are unlikely to differ in approach. Under consent, one goes with some background of facts but without conceding guilt, while under penalty proceeding, a person goes with more evidence defending oneself against guilt,” he said.
Former board members and chief executives Ravi Narain and Chitra Ramkrishna and current chief of business development Ravi Varanasi are some of the people who have applied for settlement, people close to the situation said.
Consent orders are similar to an out-of-court settlement in securities law parlance. It is a negotiated settlement between the capital markets regulator and an entity by paying a penalty or by undergoing a voluntary ban from the stock markets.
In May, Sebi issued show-cause notices to the exchange and its 14 officials — both former and existing — asking them to explain alleged irregularities in the exchange.
The regulator alleged that NSE gave preferential access to a few high-frequency traders and brokers to its trading platform.
In July, soon after Vikram Limaye took charge as the CEO of NSE, the exchange filed its consent application with Sebi.
Sources familiar with the development said 12 out of the 14 executives have filed their consent applications to settle the ongoing probe into high-frequency trades.
Umesh Jain, former chief of technology, and Anand Subramanian, former chief operating officer, have not opted for such a move.
“I have filed my response to Sebi’s show-cause notice. I have not filed for the consent process,” Jain told ET, without giving details why he has chosen to stay out of the consent process. Subramanian couldn’t be reached for comments.
A senior regulatory official said Jain’s decision not to go for consent will be crucial in this case.
“It is interesting to note that the technology head is taking a different approach from the rest. His statement would be critical,” the official said.
A source close to NSE said the exchange has left the decision of the settlement in this case to the individuals. “Each employee is free to take his stand. It is their choice whatever path they want to choose. What happens to the employee process doesn’t have a bearing on NSE’s consent process.”
NSE will bear all legal expenses incurred by the employees on the co-location case. Different law firms are assisting both NSE and the employees.
“NSE's consent application and the employees’ application are both parallel processes that are going on,” the NSE source said.
“NSE will be supportive of its employees unless there is evidence of any wrongdoing. If the employee is at fault, he or she will bear the cost.” At present, 6 out of the 14 opting for consent with Sebi are still working with NSE.
Sandeep Parekh, former executive director of Sebi and now founder of Finsec Law Advisors, said the outcome of the consent mechanism may not have an impact on the case involving two former NSE executives who have chosen to fight it out.
“The consent process and the penalty process are independent and information given under one is not shared with the other. Even otherwise, unless there are glaring inconsistencies between the two, they are unlikely to differ in approach. Under consent, one goes with some background of facts but without conceding guilt, while under penalty proceeding, a person goes with more evidence defending oneself against guilt,” he said.
