The Central Bureau of Investigation (CBI) on Thursday registered an FIR against former Mumbai police commissioner Sanjay Pandey and former National Stock Exchange (NSE) MD and CEO Chitra Ramkrishna, among others, on the orders of the home ministry. The FIR is linked to the alleged phone tapping of NSE employees conducted during the period when the co-location scam took place at the exchange.
The FIR registered on Thursday is the second FIR in the case. The CBI had registered the first FIR in the case in 2018 and arrested Ramkrishna, among others.
“Raids have been conducted at 18 locations across the country, including places connected to the accused. The fresh FIR was registered based on instructions of the MHA,” a CBI official said, refusing to elaborate on Pandey’s alleged role in the case. The official said it was linked to the phone tapping.
Earlier this week, Pandey had appeared before the Enforcement Directorate (ED), which is probing the money laundering aspect of the co-location scam.
Some BJP leaders had accused Pandey of going after its leaders at the behest of the then Maha Vikas Aghadi government in Maharashtra, a charge denied by the officer. BJP leader Mohit Kamboj, against whom an FIR was registered in connection with a bank fraud, had hinted that Pandey could face action after his retirement on June 30. Soon after recording his statement with the police last month, Kamboj had said, “While the 1st (June 1) belongs to the person who registered this case against me, the 30th (June 30) will belong to us.”
iSec Services Pvt Ltd, a company incorporated by Pandey, conducted the security audit at NSE during the period when the co-location scam is alleged to have taken place. An employee from iSec Services Pvt Ltd has already been questioned by the ED, apart from the CBI.
When iSec Services Pvt Ltd was incorporated in March 2001, Pandey was not in service. He quit the directorship in May 2006, with his mother Santosh and son Armaan becoming company directors. Based out of Oshiwara in Andheri, it was one of the IT companies tasked with conducting security audits at NSE during 2010 to 2015 when the co-location scam is believed to have taken place.
The CBI was probing the company as they believed it should have been able to detect the breaches in the NSE system during the period when the scam took place.
As per iSec’s financial records, the company was incorporated by Pandey and one Pankaj Chandra, with 5,000 shares each. Currently, Santosh is the whole-time director while one Anand Narayan is the other director. As per the shareholding pattern provided by the company on March 31, 2021, Santosh and Armaan each hold 50% each in the company and Sanjay Pandey is not a shareholder.
The NSE co-location scam relates to the manipulation of the exchange by giving select players access to market information ahead of the rest of the market. Co-location facilities that were rolled out in August 2009 are dedicated spaces in the NSE exchange building, right next to the exchange servers, where generally institutional investors and brokers place their systems or programmes.
The CBI is probing the charge that one of the trading members, Delhi-based OPG Securities, was provided unfair access between 2012 and 2014, that enabled it to log in first and get the data before others in the co-location facility. The broker is believed to have been assisted by certain NSE employees. The scam came to light due to a whistleblower’s complaint to Securities and Exchange Board of India (SEBI) in 2015, laying out the modus operandi.
The CBI registered a case in May 2018 and arrested former NSE group operating officer (GOO) Anand Subramaniam and Ramkrishna on February 25 and March 6 this year, and later Sanjay Gupta, the owner and promoter of OPG Securities Pvt Ltd, the broking firm that took illegal advantage of the NSE co-location facility.