Chitra Ramkrishna, a CA who headed the National Stock Exchange (NSE) between 2013 and 2016, was touted as one of the powerful women of the securities market in India. But she has been in the news recently for all the wrong reasons.
She had played a key role in the setting up and growth of NSE and was at the core committee of SEBI’s draft act in late 1980s. But due to her alleged proximity with a yogi, NSE was fined by SEBI. She quit due to personal reasons. SEBI has alleged that Ramkrishna shared internal confidential information, including financial and business plans of NSE, dividend scenario and financial results, with a yogi and even consulted him over the performance appraisals of employees.
CBI grilled Ramkrishna for hours in her Mumbai flat. CBI, ED and SEBI are investigating the identity of the mysterious guru from whom she allegedly took commands via email. Emails released in a SEBI order show that both had even planned a holiday together in Seychelles, even though she said she didn’t know his identity.
This has led to various questions: Who is this mysterious yogi? Were some members from the NSE hand in glove with them? Have some market brokers been given preferential treatment during her tenure?
Speaking on the issue, former executive director of SEBI RS Loona told India Legal that SEBI held Ramkrishna liable for passing on sensitive and confidential information to outsiders, which is not in accordance with its regulations. Commenting on why SEBI took six years in the disposal of the proceedings, Loona said investigations may be slightly longer, but not unusual as there are many cases where SEBI has taken more time. “It could have been better to proceed further as SEBI was not able to establish the identity of the Himalayan guru,” he said.
When asked about the chances of it going beyond Ramkrishna and the Exchange’s group operating officer and advisor to the managing director, Anand Subramanian, he said:
“Yes certainly, I think suspicion is there, but probably there could be someone more powerful within the government or in politics who was and could be the Himalayan guru. This is the job of the investigation.”
SEBI also charged Ramkrishna and others with alleged governance lapses in the appointment of Subramanian as chief strategic advisor and his re-designation as group operating officer and advisor to managing director. Loona said: “SEBI needs to do an in-depth investigation to find the identity of this yogi and, certainly, this raises questions on confidential information pertaining to this stock exchange.” To curb such incidents from happening in future, he said: “Violation of law will keep happening whatever stringent law or precaution is there. There cannot be any formula whereby this can be curbed entirely.”
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Commenting on SEBI’s charges, Alok Churiwala, MD of Churiwala Securities, a broking outfit, said that he had seen the working of the Exchange at close quarters and had been part of many committees of the Bombay Stock Exchange. He said: “Spiritualism has a lot to do with the Indian psyche. It is not out of the ordinary. In the Indian political system, there were prime ministers who would not move before consulting astrologers. When tantriks used to make national headlines, what is so surprising about a godman being consulted? However, whether this yogi is a godman or a conman should be made clear by market regulators. If any wrongdoing is done, it should be thoroughly investigated.”
Commenting on Ramkrishna’s larger than life CEO image, Churiwala said the Exchange had been reporting very good numbers, which is probably why other directors did not question her. “When you have a mercurial CEO on top, the board is also scared to question, especially when there is performance backing the actions,” he said.
He said: “NSE has been successful during this time, so some of the advice probably was good advice. But were pecuniary benefits accrued to certain people because of the yogi’s advice? Did anyone get unfair advantage? There is no law barring someone from taking advice from anyone.”
He said: “It raises a lot of governance issues. There has been the appointment of Anand Subramanian as COO, whose nomination and remuneration, the committee of the Exchange has not approved. The person was not designated as a key managerial person (KMP) and yet, the heads of all departments reported to him. Subramanian was drawing emoluments more than other KMPs in the organisation. This was a major corporate governance lapse but it cannot be laid at the door of one person only; what was the board doing? In a corporate environment, there should be checks and balances, whereby, if certain systems fail, others should take over and do course correction. These have failed in this case.”
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Senior Advocate Dr UK Chaudhary, president, National Company Law Tribunal Bar Association, said the whole incident was shocking and showed absolute misconduct on the part of a professional. “This is not a run of the mill company that the disclosure of some sensitive information is going to have an impact on the capital market or resources of the company. It is a regulator and there are hundreds and thousands of people trading on the stock exchange.”
Data is a very crucial resource. If you compare it with the gold mining, it is really diamond mining, he said. If you have information on anything, then you are well equipped to deal with that situation. If you have any price sensitive information either from a company or from a secondary source, you can either make or break yourself. So, information is the most important source and data mining is something that everybody is looking up these days, he said.
“Suppose 10-20 seconds before others plug into markets you have information which has a material bearing on the prices of shares, then you could be at a great advantage,” he said and added that it is that tick-by-tick system of a approver on which the computers operate. “Imagine sharing that information regularly with a rank outsider who has nothing to do with the capital market. It could be shareholders, brokers, companies or insider traders. Who are they? We do not know. It is only after the CBI investigation that we will find that spiritual guru.”
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He wondered why the spiritual guru should be interested in the NSE. Other people, outsiders and insiders, must have been taking that information from him. “If investigated deeper, I am sure you will find some sinister agenda. But if it is a person who is well versed with the working of the capital market, stock exchanges and SEBI, it should be made public.”
Chaudhary compared the vigilantism of SEBI with the Securities and Exchange Commission of New York. He said: “SEC is not answerable to any of the investigating agencies. Unfortunately, SEBI does not have the resources for investigating. They have the resources of inquiry.”
The concerned authorities need to be more vigilant so that transgressions of this sort don’t happen again. If any spiritual guru is interested in a stock exchange, he must have deep knowledge of the inner workings of the NSE. Only a thorough investigation will rest the case.
—By Sambhav Sharma and India Legal Bureau