A day after finance ministry officials met National Stock Exchange head Vikram Limaye, the Income-Tax Department on Thursday raided the premises of the exchange’s former managing director (MD) and chief executive officer (CEO) Chitra Ramkrishna and former group operating officer Anand Subramanian in Mumbai as part of a tax evasion investigation against them.
The raids come a week after it was revealed that Ramkrishna took key decisions at the NSE from 2013 to 2016 on the advice of a “Himalayan yogi” whom she had never met and who instructed her to appoint Subramanian group operating officer, and give him regular increments.
Ramkrishna was ousted from the NSE in 2016 for her alleged role in algo trading irregularities and abuse of power in appointing Subramanian.
The Securities and Exchange Board of India (Sebi) charged Ramkrishna and others with governance lapses in the appointment of Subramanian as chief strategic advisor and his re-designation as group operating officer and advisor to the MD.
Finance ministry officials told Business Standard while Sebi had done its investigation into the wrongdoing, the concern in government was that whether this incident would dampen investor confidence. As such, the onus is on the authorities to show that the rule of law would prevail.
“The episode shows there was a serious lack of corporate governance at the NSE during that time,” a senior official said.
“We are discussing with the market regulator (Sebi) and the NSE what lessons this investigation has for such instances in future -- whether the probe could have been done better and in less time. There are two issues here. One is to bring the guilty to book, and, two, see what impact this has on investor confidence, both foreign and domestic,” a second official said, adding, Sebi would decide if the Central Bureau of Investigation or other agencies needed to be roped in.
PTI reported the income tax searches on Thursday were aimed to check and gather evidence on the charges of financial irregularities and alleged tax evasion against Subramanian and Ramkrishna.
An official of the Central Board of Direct Taxes (CBDT) said the search was still on at the premises until late in the evening and a statement would be issued once the documents and other evidence gathered had been examined.
Sebi levied a fine of Rs 3 crore on Ramkrishna; Rs 2 crore each on the NSE, Subramanian, and former NSE MD and CEO Ravi Narain; and Rs 6 lakh on V R Narasimhan, who was chief regulatory officer and compliance officer.
The Sebi order added Ramkrishna shared certain internal confidential information, including financial and business plans of the NSE, dividend scenario and financial results, with the yogi and even consulted him on the performance appraisals of the exchange’s employees.
Ramkrishna was MD and CEO of the NSE from April 2013 to December 2016. The regulator noted in its order that she refused to reveal the identity of the unknown person and claimed the person was a spiritual force.
Ramkrishna and Subramanian have been restrained from associating with any market infrastructure institution or any intermediary registered with Sebi for three years, while for Narain it is two years.
Sebi directed the NSE to forfeit the excess leave encashment of Rs 1.54 crore and the deferred bonus of Rs 2.83 crore of Ramkrishna. In addition, Sebi debarred the NSE from launching any new product for six months.
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