SEBI Drops All Charges In 'Dark Fibre' Case Against Former NSE Employees & MD In Co-Location Scam Due To Insufficient Evidence

The Securities and Exchange Board of India (SEBI) has dropped charges against the National Stock Exchange (NSE) and seven former employees, including former MDs Chitra Ramkrishna and Ravi Narain, in relation to the co-location facility.

There was insufficient evidence to support the regulatory body's rejection of the claims of regulatory violations, according to reports.

In an 83-page decision, SEBI declared that 'the test of 'preponderance of probability' fails to produce enough justification for the establishment of collusion/connivance between OPG (Securities) and its directors with noticees (NSE and its seven employees) because there is not enough material, evidence, or objective facts on file in this case.'

Charges dropped

Additionally, charges against Deviprasad Singh, Umesh Jain, Mahesh Soparkar, Ravindra Apte, and Anand Subramanian were dropped. The case involved claims that NSE's co-location facilities were preferentially accessible to a select group of broking firms, including OPG Securities, by means of 'dark fibre' connections.

The Securities Appellate Tribunal (SAT) directed SEBI to review the case and look into any possible collusion between OPG and NSE employees in January 2023, and this latest decision complies with that directive.

No comprehensive policy for co-location

Although NSE did not have a comprehensive policy for the co-location facility and did not properly monitor the use of secondary servers, SEBI's order concluded that these factors did not establish collusion.

According to SEBI, neither the Securities Contracts (Regulation) Act (SECC) Regulation nor the Prohibition of Fraudulent and Unfair Trade Practices (PFUTP) Regulations were broken.

'In cases where establishing a violation would also require the existence of 'conspiracy', 'secret or indirect consent or permission,' making such an establishment of violation more difficult, these evidences/material/objective facts cannot lead to a determination of collusion/connivance,' the regulator concluded. This is because the evidence did not result in a violation of the PFUTP regulations or the SECC regulations.

OPG securities barred from market

In a different development, OPG Securities, Sanjay, Sangeeta, and Om Prakash Gupta have been directed by the market regulator to scoop up Rs 85.25 crore, with interest charged at a rate of 12 per cent annually starting on May 22, 2015, and continuing until the money is paid. In addition to a five-year ban, Sanjay Gupta has been barred from the securities market for six months.