The NSE co-location scam needs a larger probe. Such incidents in such an organization cannot be left because they will endanger the private sector.
Last week SEBI sent its final order on the co-location scam at the National Stock Exchange (NSE). The key executives, including MD & CEO Chitra Ramakrishna, have been indicted for violating the rules and penalised the board members have gotten away lightly.
In the SEBI’s order, it has been mentioned that the board was aware that confidential information was shared with an unknown person but decided not to alert the regulator and stay quiet. Only strictures were pulled against them.
But it is a grievous crime that calls for a comprehensive investigation. In this case, they knew the crime was committed but did not inform the regulator.
Another set of lapses was that they never raised relevant questions about a senior appointment like that of Anand Subramanian and never made sure that the candidate is qualified.
All of these turns of events show that even such professionally-run organizations with no promoters can be riddled with malfeasance. NSE was seen as the national public institution that was incorruptible.
A solution can be appointing only executive chairmen for such organizations to rebalance the responsibilities between the chairman and the CEO.
A corporate structure with a distributed power base would act as a check on the kind of appointments made at the NSE.
But even that may not be possible since it diluted the similar order of separation of the roles of the chairman and managing director.
The order also revealed that Chitra Ramakrishna enjoyed the confidence of the board and was able to run the organization exactly as she pleased. The SEBI’s order is a 190-page long report of irregularities.
The scam was about favors granted to select brokers who were given access to co-location servers and was able to access data ahead of others.
She allegedly shared confidential information on the business with regulators and an unknown person via an unofficial email account.
By tightening the rules, one should not deduce it as impeding to run the organization but to ensure that key decisions such as business and the appointment are not left to just one person.
Considering the impact of the scam on the organization, it would be appropriate to commission another forensic report. It would spot something the earlier ones have missed and help plug any loopholes.
Roping in real investigative agencies is also good, as they will reveal more facts and roles in this scam. This lapse should be considered seriously so that no CEO should get away with this ever again.
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