Ex-NSE CEO, former top cop Pandey in new CBI case
Premium- In the NSE scam, some brokers got faster access to the NSE systems, data and trading at the cost of the broader market
The Central Bureau of Investigation (CBI) on Friday registered an FIR against former Mumbai police commissioner Sanjay Pandey and former heads of the NSE for allegedly tapping the phones of employees between 2009 and 2017. The case is related to the NSE co-location scam.
“A fresh case has been registered against Pandey, Chitra Ramkrishna and Ravi Narain," said a CBI official seeking anonymity. “It has been registered on the directions of the ministry of home affairs. Since early morning, CBI conducted raids at 18 locations," he added.
The investigating agency carried out simultaneous raids across Kota, Lucknow, Pune, Chandigarh, Delhi and Mumbai. In a press statement, CBI said besides Ramkrishna and Narain, NSE vice-president Ravi Varanasi and former head of premises, NSE, Mahesh Haldipur, allegedly conspired with ISec Services Pvt. Ltd to intercept phones of NSE staff illegally.
Incorporated by Pandey in 2001, iSec Services was among many IT companies that conducted security audits at NSE between 2010 and 2015, when the co-location scam allegedly took place. CBI started investigating the role of the security auditor as it should have been able to detect the breaches in the NSE system when the scam occurred.
In the co-location scam, some brokers got faster access to the NSE systems, data and trading at the cost of the broader market. “In furtherance to the conspiracy, the said private company was allegedly engaged in the guise of conducting ‘periodic study of cyber vulnerabilities‘ at the NSE. It was further alleged that top officials of the NSE issued agreement/work orders in favour of said private company and illegally intercepted phone calls of employees by installing machines, in contravention of provisions under the Indian Telegraph Act," CBI said in a statement.
It also alleged that interception was done without employees’ consent, and transcripts of the calls were recorded by ISec for a fee of ₹4.45 crore. The transcripts were provided to senior officials of the NSE.
On Tuesday, the former top cop also appeared before the Enforcement Directorate (ED) in relation to the functioning and activities of iSec Securities. The firm was, among other entities, tasked with conducting a security audit of NSE between 2010 and 2015 when the exchange systems were compromised to benefit a few brokers.
“The firm is being probed to find out why it did not inform that NSE servers were compromised," said an ED official, also requesting anonymity.