NSE co-location case: Former city top cop Sanjay Pandey appears before ED

NSE co-location case: Former city top cop Sanjay Pandey appears before ED

The agency is recording Pandey's statement under the provisions of the Prevention of Money Laundering Act (PMLA)

Somendra SharmaUpdated: Tuesday, July 05, 2022, 09:17 PM IST
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Sanjay Pandey | File Photo

Former Mumbai police commissioner Sanjay Pandey appeared before the Enforcement Directorate (ED) in Delhi on Tuesday for enquiries in a money laundering case linked to the National Stock Exchange (NSE) co-location scam.

The agency is recording Pandey's statement under the provisions of the Prevention of Money Laundering Act (PMLA). On Saturday, the ED had issued summons to Pandey, asking him to appear on Tuesday.

Pandey, a 1986-batch Indian Police Service officer, retired from service on June 30. Before his four-month stint as Mumbai’s top cop beginning March 1, he served as acting Maharashtra director general of police.

Pandey’s questioning by the ED is related to the functioning and activities of a company called iSec Securities Pvt Ltd, one firm amongst a few others that conducted a security audit of the NSE around the time the co-location irregularities are alleged to have taken place. The said company was incorporated by Pandey in March, 2001 and he quit as its director in May, 2006. His son and mother took over charge of the company. The ED wants to understand the mandate, operations and results achieved by the company while it worked with the NSE.

In April this year, the ED had carried out searches at multiple locations in Delhi and Gurugram in connection with the case.

On May 28, 2018, the CBI had registered a case of criminal conspiracy, attempt to give and receive bribe, misuse of official position and destroying evidences against the owner and promoter of a New Delhi-based private company, unknown officials of the SEBI and the NSE, Mumbai and other unknown persons. Following this, the ED had launched a money laundering investigation into the case.

According to the CBI, it was alleged that the owner and promoter of the said private company abused the server architecture of the NSE in conspiracy with unknown officials of the bourse. It was also alleged that unknown officials of the NSE, Mumbai, had provided unfair access to the said company using the co-location facility during the period 2010-2014 that enabled it to log in first to the exchange server of the stock exchange, helping it get the data before any other broker in the market.

The CBI had earlier arrested former NSE CEO and MD Chitra Ramkrishna, her advisor and former Group Operating Officer Anand Subramanian and OPG Securities MD Sanjay Gupta in the co-location case.

What is co-location?

Co-location is a set up wherein the broker's computer is located in the same area as the server of the stock exchange. This particular set up of server gives speed advantage to the brokers availing the co-location facility in comparison to other brokers. Till 2014, information was disseminated by exchange server to the brokers attached with co-location facility through TBT-based system architecture. In this architecture, data was disseminated in a sequential manner whereby stock brokers who connected to server with lesser load would gain an unfair advantage.

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