Sebi issues show cause notices to NSE over appointment of Anand Subramanian

The Securities and Exchange Board of India (Sebi) has issued show cause notices (SCNs) to the National Stock Exchange (NSE) over the appointment and promotion of Anand Subramanian. The capital markets regulator had issued its initial notice in October and a supplementary notice in December.

Subramanian had joined the NSE in April 2013 as chief strategic advisor, at a time when Chitra Ramakrishna took charge as managing director (MD) and chief executive officer (CEO). He was elevated to group chief operating officer (COO) in April 2015. Subramanian’s appointment and compensation package had raised eyebrows at the time, considering his earlier profile at a logistics firm.

“The NSE is in receipt of Sebi’s show cause notice… alleging violation in relation to certain alleged irregularities in the appointment of a chief strategic advisor and his re-designation as ‘Group Operating Officer and Advisor to MD’ by the former MD and CEO, and the sharing of certain internal information pertaining to the NSE with an alleged third party by the former MD and CEO,” the exchange said in a disclosure.

The exchange has sought certain documents, pertaining to the matter, from Sebi for inspection. The bourse has also filed a consent application to settle the matter. Under the consent mechanism, an alleged wrongdoing can be settled without admission or denial of guilt. The NSE is awaiting Sebi’s response on the consent plea.

Sebi’s notices to the NSE come almost three years after Subramanian’s departure. He had quit in October 2016. In December that year, Ramakrishna also resigned as MD and CEO amid allegations of irregularities at the exchange’s co-location facility. 

The markets regulator has directed the NSE to divest its stake in Computer Age Management Services (CAMS) within a year. 

CAMS is a leading registrar and transfer agent (RTA) for the mutual fund industry. NSE Investment, an arm of the exchange, had picked up 45 per cent stake in the company in December 2013.

“Sebi vide its letter dated February 4, has noted that NSE should have obtained prior permission of Sebi for acquisition of stake in CAMS, an associate company, through its subsidiary namely NSE Investment Limited in FY2013-14, and has directed NSE to divest its stake in CAMS within a period of one year, including certain restrictive directions in relation to the said stake in CAMS. The company is doing the needful,” says a disclosure on the exchange’s website.

People in the know said the exchange will have to divest the stake before it launches its initial public offering (IPO). Earlier this year, CAMS had filed its offer document with Sebi for an IPO.

Through the IPO, existing shareholders are looking to pare their holdings. It remains to be seen how the Sebi diktat to the NSE impacts CAMS’ proposed share sale.

Besides the NSE, private equity majors Warburg Pincus and Faering Capital, as well as ACSYS Investments and HDFC group, are other shareholders in CAMS.

Karvy Computershare and Link Intime are other major players that operate in the RTA space, which has seen significant interest for PE investors and global financial institutions in recent years.