Sebi penalises NSE, former chiefs over lapses in senior-level hiring

NSE has also been barred from launching any new product for six months

The Securities and Exchange Board of India (Sebi) has penalised the National Stock Exchange (NSE), its former CEOs Chitra Ramkrishna and Ravi Narain for governance lapses in hiring of its chief operating officer (COO) Anand Subramanian.

Ramkrishna has been directed to pay Rs 2 crore, while NSE, Narain and Subramanian have to pay Rs 2 crore each within 45 days.

Further, NSE has been barred from launching any new product for six months.

Ramkrishna and Subramanian have also been restrained from associating with any market infrastructure institution or Sebi-registered intermediary in any capacity for a period of three years and Narain for two years.

NSE has also been directed to forfeit the excess leave encashment of Rs. 1.54 crore and the deferred bonus of Rs. 2.83 crore of Ramkrishna.

The matter pertains to appointment of Subramanian as Chief Strategic Advisor (CSA) in April 2013 and his re-designation as ‘Group Operating Officer and Advisor to MD’ in April 2015.

The market regulator launched an investigation into Subramanian’s appointment after it received complaints of alleged governance lapses. It was alleged that Subramanian was hired despite no prior experience in the related field and given a disproportionate hike in salary and was paid more than most seniors at NSE. Further, he had superior powers and privileges and yet wasn’t identified as ‘key managerial personnel.’

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Subramanian “has acted against the interest of NSE and mis-utilised his position as one of senior management of NSE by significantly influencing the decisions in NSE on various aspects of the functioning of the stock exchange including benefitting himself by re-designating as Group Operating Officer and Advisor to MD,” the Sebi order states.

During Sebi’s investigation in another matter pertaining to lapses at NSE’s colocation facilities, it also came to light that Subramanian had continuously shared internal confidential information of NSE with the unknown person.

The Sebi order says Narain in spite of being aware of the irregularities on appointment of Subramanian neither opposed the serious governance lapses in NSE nor recorded the aforesaid matter in the minutes of meetings.