SEBI Issues a Demand Notice to Anand Subramanian To Recover Rs2 Crore Penalty
Moneylife Digital Team 28 April 2022
Market regulator Securities and Exchange Board of India (SEBI) has issued a demand notice of Rs2.05 crore to Anand Subramanian, former group operating officer (GOO) of National Stock Exchange (NSE), in a case related to governance lapses at the Exchange. 
On 11th February, SEBI had imposed a monetary penalty of Rs2 crore on Subramanian. The regulator has asked Mr Subramanian to pay this amount within 15 days. 
In the event of non- payment of the dues, SEBI said it would recover the money by different modes such as attachment and sale of Mr Subramanian's movable or immovable property, attachment of bank account and arrest. It may even appoint a receiver for management of his properties. 
SEBI said following the service of the notice, Mr Subramanian cannot mortgage, charge or lease his properties except with the permission of the recovery officer.
In its February order, SEBI had barred Chitra Ramkrishna, former managing director (MD) and chief executive officer (CEO), Ravi Narain, former vice-chairman, and Anand Subramanian, former GOO and adviser to MD and CEO, from associating with any market infrastructure institution (MII) or any intermediary registered with SEBI. While imposing a monetary penalty of Rs3 crore on Ms Ramkrishna, the market regulator had asked NSE to forfeit her excess leave encashment of Rs1.54 crore and the deferred bonus of Rs2.83 crore. The market regulator also restricted NSE from launching any new product for six months.
The SEBI order from February 2022 tabulates and documents the extraordinary rise of Anand Subramanian, with the connivance of the NSE board, without declaring him a key management person (KMP) even while he was appointed on the boards of NSE’s subsidiary companies and almost every decision of the Exchange, since his appointment as a consultant, was routed through him. He also availed perks that were not given to any other consultant; he travelled first class around the world, often accompanying Ms Ramkrishna and was allowed to spend two to three days a week in Chennai, where his wife was also employed by the Exchange. 
More importantly, his evaluation did not go through the HR (human relations) process and was decided by Ms Ramkrishna alone. It is a scandal that all this was unknown to the regulator, although NSE is a highly regulated and very sensitive market institution.
After receiving the complaints, SEBI, four times in 2016, asked NSE to clarify if Anand Subramanian had been designated as KMP. VR Narasimhan, the then CRO, told SEBI that there was no violation of Securities Contracts (Regulations) (Stock Exchanges and Clearing Corporations) Regulations, 2012 (SECC Regulations) in the appointment of Mr Subramanian and the MD, being a competent authority, had appointed him.
Separately, the Union government informed the Lok Sabha in March this year that the co-location (Colo) issue at NSE was caused due to the Exchange not exercising requisite due diligence while putting in place the tick-by-tick (TBT) market data feed dissemination architecture. 
Pankaj Chaudhry, minister of state for finance, told the lower house that, in 2015, SEBI received specific complaints alleging certain irregularities in respect of colocation facility provided by NSE. "On examination and investigation by SEBI, it was noticed that due to lack of sufficient checks in the system architecture, a few stockbrokers connected to the exchange market data feed system through secondary server and had latency advantage." 
"For lapses in this regard, NSE's former MD and CEOs have been held responsible for breaches of the relevant provisions of Securities Contracts (Regulations) (Stock Exchanges and Clearing Corporations) Regulations, 2012. Further, SEBI passed various order(s) against OPG Securities Pvt Ltd and initiated adjudication proceedings against various entities in the matter of preferential access to TBT data feed to certain trading members," Mr Chaudhry said.
Anand Subramanian was asked to resign in October 2016 and the drama of his removal has been documented by Moneylife editors Sucheta Dalal and Debashis Basu in their book Absolute Power: Inside Story of the National Stock Exchange’s Amazing Success, Leading to Hubris, Regulatory Capture and Algo Scam, released in June 2021. SEBI had been sitting on this information since 2014 and has issued its order only now.
Read our coverage on NSE Algo Scam here
2 years ago
Why is Narasimhan who was the CRO not chargesheeted and put behind bars since Anand Subramanian's appointment was blatantly irregular and unauthorized.
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