The Board of Directors of the National Stock Exchange (NSE) ‘failed’ to report to the Securities and Exchange Board of India (SEBI) the market regulator despite its ‘knowledge of grave wrongdoing and misconduct’ on the part of the then Managing Director and CEO Chitra Ramkrishna and instead of acting against it, let it out Thank you very much.
When she resigned on December 2, 2016, the board of NSE was chaired by ex-Finance Minister Ashok Chawla and included ex-CEO of Sippy Dharmshata Raval, ex-judge of Supreme Court PN Srikrishna, ex-secretary at Ministry of Corporate Affairs Naveed Masood, KPMG ex-executive vice president of India Dinesh Kanabar, Manipal Global Education Services Chairman Mohandas Pai, Managing Director Atlantic Abhay Havaldar, Azim Premji Investments Prakash Parthasarathi, along with Ravi Narain, Vice Chairman, and Ramkrishna herself.
According to Sippy, even after learning that Ramakrishna was relying on the guidance of an “unidentified person” while making important decisions, the NSE Board of Directors allowed her to “come out by resigning” and scored appreciation at the Board meeting held on December 2, 2016, of her “excellent contribution to the organization growth. These observations came after the regulator heard NSE and Ramkrisna’s responses to reason-of-show notices sent in October 2019 and December 2019.
Kanabar, Pai and Masoud joined the company’s board of directors in July 2016, five months before Ramkrishna resigned. Chawla became NSE Chairman in May 2016 after former LIC Chairman SB Mathur completed a three-year term as NSE Chairman.
Anand Subramanian, “Group Operations Officer and MD Consultant,” whose appointment sparked controversy, joined NSE during Mathur’s tenure. This appointment by Ramkrishna was arbitrary and not in accordance with NSE policies. Furthermore, she shared confidential information with an “unknown person” and misled NSE that the unknown person was “Siddha Purusha”.
According to a former NSE director who was a board member when Ramkrishna stepped down, SEBI contacted the board around August 2016, citing alleged abuses involving the Subramanian appointment and bonuses reported to the regulator by anonymous letters.
After the SEBI contact, in which it asked the Board of Directors to investigate the issue, the Board of Directors established an investigative committee chaired by its Audit Committee Chairman Dinesh Kanabar. “We found that there was a gross abuse of power by the CEO (Ramkrishna) in making substantial compensation payments to Subramanian for a period of four years. The HR department said the issues regarding Subramanian compensation were approved by the CEO,” the former director said on condition of anonymity. about his identity.
In October 2016, the Board of Directors met and decided that Subramanian should go. Subramanian’s departure, according to the former manager, caused a rift between Ramkrishna and the council.
Following the exit of the Operations Director, the Board commissioned a criminal investigation by Ernst & Young that investigated suspicious emails sent by Ramkrishna related to Subramanian’s appointment and reward. Based on EY’s report, the board confronted Ramkrishna, and this culminated in her resignation on December 2, 2016, according to the former director on the NSE board.
But the company said at the time that it had resigned for “personal reasons”.
when i call him Indian ExpressJudge BN Srikrishna, who was appointed Director of Public Interest at NSE in August 2013, and who resigned after his three-year sentence, declined to comment. Chawla and Kanabar did not respond to calls and texts asking for comments.
NSE and its Board of Directors were aware of Ramkrishna sharing confidential information with an unknown person with email id [email protected] at its meeting on November 29, 2016. “However, NSE and its Board made a conscious decision not to report the matter to SEBI and kept the matter confidential.” .
Lack of corporate governance
The stock exchange is a first-level regulator. The fact that the NSE board was aware of “gross irregularities” in the behavior of the former CEO and Managing Director indicates the need for much higher checks and balances.
According to a SEBI Order of February 11, 2022, the failure by the NSE to provide information to SEBI even after repeated reminders, failure to designate Subramanian as a Key Administrative Person (KMP) and “the concealment of information from SEBI demonstrates non-referral to SEBI advice and indifference to the provisions of the Act” .
NSE fails to manage the exchange with professionalism, integrity, impartiality, efficiency and effectiveness; fail to maintain the highest standards of personal integrity, honesty, integrity and consistency in the performance of their duties and have engaged in acts that discredit their responsibilities; fail to perform their duties in an independent and objective manner; They fail to perform their duties with a positive attitude and support open communication constructively.
The regulator noted how Ramkrishna has taken initiatives to raise standards of corporate governance. While companies whose securities are registered with the NSE are required to comply with corporate governance standards, they have taken a step forward with the launch of a new corporate governance initiative, “NSE Prime”, under which higher corporate governance standards have been set for listed companies.
EY’s report on the incident says that only desktops intended for Ramkrishna and Subramanian were photographed/checked, and notebooks for NSE and Subramaniam were not available for criminal imaging as they were disposed of as electronic waste, the regulator said.
When managers of the public interest see any significant regulatory error in the functioning of the exchange, the regulator said they should report it to SEBI. However, this was not done in this case. Moreover, by only allowing Ramkrishna to resign and taking no action against it, NSE has not acted in the interest of the stock market, which has resulted in the failure of its primary responsibilities, SEBI said.
(With entries from AASHISH ARYAN and SUNNY VERMA in New Delhi)