In a recent scandal, it has come to light that former MD and CEO of the National Stock Exchange (NSE) Chitra Ramakrishna consulted an unknown 'Himalayan yogi' to help run the exchange, taking key decisions as well as shared confidential information with him. She led the NSE as MD and CEO from April 2013 to December 2016.
Why in News now?
A new order placed on the Sebi website last week revealed the presence of this yogi and his influence on Ramakrishna when she was running the exchange. As per the order, Ramkrishna had been guided by this yogi, whom she referred to as ‘Shironmani’, for 20 years, in matters personal and professional. This unknown ‘yogi’, is represented only by the email id rigyajursama@outlook.com.
Ramakrishna never met this yogi in person and only communicated with him through the above-mentioned email ID. Ramkrishna told SEBI that she did consult the NSE board about various things, but when it came to taking the final call, she sought guidance from the yogi. “Their spiritual powers do not require them to have any such physical coordinates and would manifest at will,” Ramkrishna said.
The 190-page order, submitted by Ananta Barua, SEBI’s whole-time member informed that the existence of this person is still unknown. These details are part of SEBI’s final order on Friday after a probe against Ramakrishna, NSE, and four others.
As per the order, Ramakrishna shared information with this yogi information including NSE’s five-year projections, financial data, dividend ratio, business plans, agenda of the board meeting, and even consulted him on employee performance appraisals.
The yogi also guided her to appoint Anand Subramanian as her adviser and later promoted him to Group Operating Officer at a massive salary of ₹4.21 crore. He was also the husband of her friend and an NSE staffer. The NSE board was not against the appointment on grounds that he was hired a consultant, and that the CEO had the authority to promote him.
Even after more than four years of investigating this scandal, Sebi still does not have the identity of this ‘Himalayan recluse’. However, a cyber forensic expert stated that the regulator will be able to crack the identity of this yogi in the next 10 to 15 days.
Did other NSE executives know about the yogi?
The probe revealed that the NSE board was aware of yogi but did not report it to the market regulator and kept it under wraps. Ramkrishna’s predecessor Ravi Narain was also allegedly fully aware of the happenings.
The SEBI order said, “It is not unusual that the whip of an arbitrary and dictatorial reign would cause any employee to be reluctant in filing a complaint against its top leader in fear of the repercussions. This is evident from the various anonymous complaints received by SEBI against Ramkrishna, from which these proceedings have emanated and various irregularities unearthed.”
Despite the lapses and misconduct, the NSE board allowed Ramkrishna to resign citing ‘personal reasons’ in 2016, rather than firing her and even gave her ₹4 crore as pending dues and salary when she left NSE.
Once Ramkrishna quit, the NSE disposed of the laptops belonging to her and Subramanian as ‘e-waste’, thereby destroying substantial evidence.
Identity of Yogi
Sebi had hired audit firms EY and Deloitte to investigate the co-location scam. In 2017, EY, in its report, included emails exchanges between Ramakrishna and an outsider-influencer. The firm had identified the yogi as the former Group Operating Officer Anand Subramanian, who was hired by Ramkrishna. However, Sebi in its latest order dismissed EY’s finding due to inadequate and contradictory evidence.
Punishment
Even after such damning evidence of lapses in governance, SEBI has fined Ramakrishna only ₹3 crore, and the former MD Ravi Narain and Subramanian ₹2 crore each, for violating securities contract rules. The yare required to pay this amount in 45 days. Meanwhile, VR Narasimhan, who was then the Chief Regulatory Officer and Chief Compliance Officer, has been fined ₹6 lakh and the exchange has been barred from launching any new product for six months.
Sebi also directed Ramkrishna to forfeit the leave encashment and deferred bonus received from the NSE at the time of her departure. Further, she and Subramanian have been banned from associating themselves with any markets-related institution or SEBI-registered intermediary in any capacity for three years. Narain faces a similar order effective for two years.
About Chitra Ramakrishna
Ramakrishna was the MD and CEO from April 2013 to December 2016. Before joining NSE, she worked with the IDBI Bank as well as Sebi. She was one of the founding members of NSE.
She overtook the reins from the previous CEO Ravi Narain, who was ousted after NSE witnessed a massive crash claimed to be due to a technical glitch.
As per a PTI report, on the morning of October 5, 2012, NSE was hit by the so-called 'fat finger trade' which resulted in a trade getting executed in a fraction of a second for a whopping amount of ₹650 crore and triggering a massive 'flash crash', wiping off nearly ₹10 lakh crore from investors' wealth in the Indian stock market within seconds. Such was the momentum of the crash that a mandatory trading halt could be put in place only after a sudden 16 percent crash in the benchmark index Nifty -- it missed two check-posts, first at 10 percent and then at 15 percent within six seconds.
Post this incident, Narain was ousted from the NSE and Ramakrishna became the new CEO in 2013.
In 2016, she came under investigation due to a co-location scam in which select investors were suspected of receiving stock price information early on, helping them earn millions. The rigging of the NSE’s algo-trading and use of co-location servers was allegedly done with the connivance of insiders. The matter came to light when a whistle-blower complained to SEBI in January 2015. After that Ramkrishna stepped down as NSE chief in December 2016.
How does this affect investors?
NSE is the biggest stock exchange in India and such major governance lapses coming to light weakens the confidence of investors in the exchanges forcing them to invest in other assets for safety. This will also give a red signal to foreign investors, who are already withdrawing money from Indian equities.
