Scope of investigation in NSE co-location scam not limited to the RC, CBI tells Delhi HC

The Central Bureau of Investigation (CBI) last week informed the Delhi High Court that the scope of the investigation in the National Stock Exchange (NSE) co-location scam was not limited to the names mentioned in its regular case and could be expanded to persons yet to be named..The CBI had registered a regular case (RC) in the NSE co-location scam in 2018. The investigation in the case is ongoing..The submission was made before a Division Bench of Justices Siddharth Mridul and Anu Malhotra in a petition by journalist, Shantanu Guha Ray..Ray had filed a complaint with the CBI in August 2017, alleging that the co-location scam could not have happened without the active involvement of the Finance Ministry. In his complaint to the CBI, Ray sought an investigation against Finance Ministry officials, including former Finance Minister P Chidambaram, and SEBI Officials who “were hand in glove” with the NSE officials. The petition reads,.“The grant of co-location service does not only facilitate fraudulent market gains but also threatens the integrity of the entire market and compromises national interest… This was not possible without political/bureaucratic blessings i.e. persons sitting in the Government always protected NSE for its wring doings. Thus NSE controlled SEBI by appointing CB Bhave (as Chairman SEBI) through KP Krishanan..on the instructions of P Chidambaram….This conspiracy between P Chidambaram and CB Bhave was further supported and complemented by Ajay Shah, Susan Thomas, KP Krishana, CKG Nair, Chandrashekhar Mohapatra, Manoj Joshi, Rose Mary and many other members of staff in Finance Ministry under KP Krishnan...”.Apprehending that his complaint was not being investigated by the CBI, Ray preferred a writ petition to direct the CBI to widen the scope of its investigation..Alternatively, the petitioner sought for a direction to constitute a Special Investigation Team under the supervision of the High Court to look into the entire range of conspiracy disclosed in his complaint..In its status report submitted before Court, CBI has submitted that an RC was registered on May 28, 2018, under Sections 120B, 204 of the Indian Penal Code & Sections 7,12,13(2) read with 13(1)(d) of the Prevention of Corruption Act and Section 66 of the Information Technology Act, 2000..Presently, the entities named in the RC include OPG Securities Pvt Ltd, its promoter Sanjay Gupta, Aman Kokrady, Ajay Narottam Shah, unknown officers/officials of the SEBI and the NSE, and “other unknown persons”..The CBI has stated that the investigation is aimed at ascertaining the whether OPG securities tried to exploit TBT (tick-by-tick) architecture at NSE with the help of NSE officials who facilitated its early login, preferential access to backup/secondary servers, preferential market feed in comparison to other brokers etc..Another aspect being investigated is whether a bribe was paid by OPG Securities to SEBI officials for getting a favourable report in its enquiry into the misuse of NSE TBT architecture..Furthermore, the CBI is also looking into the role of Ajay Narottam Shah in misusing the NSE trade data for the development of an algo software ‘Chanakya’, which was sold to selected brokers to facilitate the exploitation of the NSE TBT architecture..The CBI has nonetheless clarified that in case any additional fact emerges against any public servant of SEBI/NSE/any department/Ministry or any other private person or public servant, the same shall be investigated thoroughly in accordance with the law..“Any fraudulent act or any commission /omission of act which resulted in wrongful gain to anyone or wrongful loss to anyone committed by any public/private person irrespective of the fact that he os FIR named or not shall be examined during the investigation.”.It has been further submitted that pursuant to the registration of the case, the CBI conducted searches at various places and several documents from SEBI and NSE have been collected and scrutinized. Voluminous electronic data from NSE has also been collected..The status report was submitted pursuant to an April 30 order of the Court. After the CBI’s status report was taken on record by the Court, the petitioner deemed it appropriate to withdraw his petition..While disposing of the plea, the Court recorded,.“It is needless to state that the Petitioner would be at liberty to obtain the requisite information qua the subject matter of the petition from the Investigating Officer.“.The petitioner was represented by Senior Advocate Mahesh Jethmalani with Advocates MR Venkatesh, Harshvardhan Jha, Gunjan Mangla and Mayuri Shukla..CBI was represented by Special Standing Counsel Anil Grover with Advocates Noopur Singhal and Mishal Vij..Read the order:.Bar & Bench is available on WhatsApp. For real-time updates on stories, click here to subscribe to our WhatsApp.