According to the SEBI order, NSE’s former Managing Director and Chief Executive Officer Chitra Ramakrishna brought Anand Subramanian into the NSE as Chief Strategic Advisor, but in a consultant’s role working four days a week. Formerly working as a mid-level manager in Balmer and Lawrie and with no previous exposure to capital markets, Subramanian's salary at Balmer and Lawrie was Rs 15 lakh per annum. His compensation package was raised to Rs 1.68 crore when he joined NSE.
The Securities and Exchange Board of India on February 11 passed an order imposing a penalty of Rs 3 crore on NSE's former Managing Director and Chief Executive Officer Chitra Ramakrishna, for sharing internal confidential information of the exchange with an unknown person, besides irregularities in the appointment of a senior official Anand Subramanian, for which NSE and the senior management, too, were responsible. Bizarrely, Ramakrishna said that she was being guided by a 'yogi' living in the Himalayas on decisions relating to Subramanian's compensation.
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Let's take a look at what the case is about.
Who is Anand Subramanian?
He was Chief Strategic Advisor of NSE from April 1, 2013, and was re-designated as Group Operating Officer and advisor to MD and CEO from April 01, 2015, till October 21, 2016.
How did he get hired by NSE?
According to the SEBI order, Ramkrishna brought Subramanian into the NSE as Chief Strategic Advisor, but in a consultant's role working four days a week. Subramanian was formerly working as a mid-level manager in Balmer and Lawrie and had no previous exposure to capital markets. His salary at Balmer and Lawrie was Rs 15 lakh per annum. His compensation package was raised to Rs 1.68 crore when he joined NSE.
What were the irregularities in Subramanian's appointment?
The Human Resources department was not consulted. The position of Chief Strategic Advisor was not advertised, neither was any other person considered for the position. The only person who interviewed Subramanian for his appointment was Ramkrishna. There were no notings in the personnel file of Anand Subramanian in relation to his interview. Over the years, Subramanian was given arbitrary and disproportionate increases in compensation. By FY17, Subramanian was drawing an annual package of Rs 4.21 crore while remaining a consultant. This compensation was higher than what most senior executives in the exchange were drawing. Also, despite his seniority, Subramanian was not designated as Key Management Personnel (KMP).
When did this catch the attention of SEBI?
During the course of the investigation into the issue of co-location facilities at NSE, it emerged that Ramakrishna had shared certain internal confidential information of NSE viz: organizational structure, dividend scenario, financial results, human resources policy, and related issues, response to the regulator, etc., with an unknown person via emails to email@example.com from 2014-2016.
What was Ramakrishna's response when SEBI asked her for an explanation?
Ramakrishna said the identity of the email id holder firstname.lastname@example.org was a Siddha Purusha/Yogi, i.e. a Paramahansa largely dwelling in the Himalayan ranges. She said he is a spiritual force who has been guiding her for the past 20 years and that as a spiritual force, he would manifest at will. The SEBI order noted that Ramakrishna was deeply influenced by this 'yogi', who would write emails to Ramakrishna, directing her on Subramanian's designation and compensation. Interestingly, Subramanian, too, was marked on the same mail. In addition, the yogi also advised Ramakrishna on redesignations and promotions of other senior officials as well.
Was the NSE aware of Ramakrishna's correspondence with the Paramahansa?
Did the NSE inform SEBI about it?
No. The NSE and the board took "a conscious decision to not report the matter to SEBI and keep the matter under wraps", the SEBI order said. The regulator also slammed the NSE and its board for not taking action against Ramakrishna and allowing her to exit through resignation despite having knowledge of the grave irregularities and misconduct.
So who exactly is the person behind the email id email@example.com?
According to a forensic audit by consultancy firm E&Y, it was Anand Subramanian himself directing Ramakrishna.
What is NSE's view on this?
In its letter dated November 27, 2018, to SEBI, NSE submitted that its legal advisors had consulted practitioners dealing with human psychology. "As per the opinion of human psychology expert Ramakrishna has been exploited by Subramanian by creating another identity in the form of Rigyajursama to guide her to perform her duties according to his wish. The Noticee no. 1 (Ramakrishna) was manipulated by the same man in the form of different identities; one as Noticee no. 6 (Subramanian), who enjoyed her trust, and the other as Rigyajursama, who had her devotion and dependence," the SEBI order said, quoting NSE's response.
What is SEBI's view on this?
The SEBI order says that there is no conclusive evidence that the person behind the email id was Subramanian himself. However, what is evident from the E&Y report is that confidential information/data, including those pertaining to NSE 5 year financial projections, dividend pay-out ratio, NSE's business plans, agenda of NSE's board meeting and consultations over the ratings/performance appraisals of NSE employees, has been shared with an unknown person/ an outsider.
What is SEBI's case against Ravi Narain, Ramakrishna's predecessor?
The SEBI order says Narain was aware of the irregularities in the appointment of Subramanian as Group Operating Officer without being designated as KMP and correspondences of confidential information by Ramakrishna with an unknown person. Yet, at the NSE's meetings on October 21, 2016, and November 29, 2016, Narain neither opposed the serious governance lapses in NSE nor recorded the matter in the minutes of the meeting, citing confidentiality and sensitive information.
What are the penalties imposed by SEBI on Ramakrishna, NSE, Ravi Narain, Anand Subramanian?
SEBI has imposed a penalty of Rs 3 crore on Chitra Ramakrishna and barred her from associating with any market infrastructure institution or any SEBI-registered intermediary for three years. In addition, NSE has been asked to recover Rs 1.54 crore paid to Ramakrishna as leave encashment and withhold Rs 2.83 crore of deferred bonus payment. NSE, Narain and Subramanian have been fined Rs 2 crore each. NSE has been forbidden from launching any new product for the next six months. Narain and Subramaniam have been barred from associating with any market infrastructure institution or any SEBI-registered intermediary for two and three years, respectively.
(Edited by : Priyanka Deshpande)
First Published: IST