I-T dept brings in ED to check money trail in NSE co-location case

OPG Securities under scanner for forex transactions

Delhi-based OPG Securities, which is in the eye of the storm for gaining unfair access to the National Stock Exchange’s (NSE’s) trading systems, could be in further trouble. 

According to sources, the income-tax (I-T) department has come across banking transaction records involving the brokerage where money was sent to accounts located outside the country.

Last week, the I-T department conducted an extensive search and survey on at least half a dozen individuals, including former and current officials of the NSE and brokers who could have made benefitted from the trading flaws at the exchange. Taxmen seized Rs 11 crore in cash from the premises of OPG Securities. They also collected documents related to foreign bank accounts and overseas trading funds. A senior tax official said, “We found some irregularities in the transactions and will be bringing in the Enforcement Directorate (ED) to probe the matter under anti-money laundering laws.” 

“During the searches on about 50 locations of the OPG group and others in Mumbai, Delhi, Bengaluru and Kolkata, we found several transaction records where money was being sent to the specific account located outside India,” said the I-T officer privy to the development.  

Text messages and calls to Sanjay Gupta, managing director and founder of OPG Securities, went unanswered. 

The I-T official said the search operations went on till Sunday. The department has recorded the statements of several individuals suspected to have gained from the co-location issue. The individuals were grilled over their roles and responsibilities. 

Sources say the tax department’s search operation was based on market regulator Securities and Exchange Board of India’s (Sebi’s) technical committee’s findings, which prompted a series of forensic audits. The I-T department in Delhi had also studied the show-cause notice served to 14 individuals in the said matter, the sources said.

Citing the findings of the notice, a senior official said, “The report raises serious questions on at least three persons who continuously helped or were in touch with OPG Securities. This enabled the brokerage gain access to the servers ahead of others.” 

The tax department is also gathering more information on the report’s findings which said the trading volumes at broking firm Way2Wealth increased from 3.3 per cent in January 2014 to around nine per cent in the mid-2015. It showed a huge increase in algorithm trading volumes at the brokerage from 12 per cent to 25 per cent. 

Sources say the taxmen suspect strong political backing in the entire co-location issue. The I-T department is said to be in possession of several email trails indicating indirect links, which support the claims.