NSE co-location case: Who is Anand Subramanian and why is he arrested?

CBI, which filed an FIR four years ago, is under pressure to crack down on the NSE co-location case.

The Central Bureau of Investigation (CBI) on Friday arrested the National Stock Exchange’s (NSE) former Group Operating Officer (GOO) and advisor to Managing Director (MD) Anand Subramanian. Here is an explainer on who he is and why he has been arrested now:

His role at NSE

Subramanian joined NSE on April 01, 2013 as chief strategic advisor. Prior to joining NSE, he worked at an arm of Balmer & Lawrie as vice president. He was re-designated as GOO and advisor to MD and CEO Chitra Ramkrishna from April 1, 2015 till October 21, 2016. He was associated with the exchange as a consultant.

Disproportionate salary

The initial package offered to Subramanian by NSE was Rs 1.68 crore, which included variable pay of Rs 42 lakh. This despite his salary at the previous employer being only Rs 15 lakh per annum. By April 2016, Subramanian's compensation had increased to Rs 4.21 crore—higher than most seniors at NSE.

Chitra’s aide

Subramanian was close to NSE’s then boss Ramkrishna. He was consistently rated as top performer without any documentary evidence of his performance evaluation. His promotion and salaries were not tabled before the exchange’s Nomination and Remuneration Committee (NRC) as required under the provisions of the Companies Act. Nor was he classified as a key managerial personnel (KMP) although several heads at NSE reported to him. It is alleged that his office was next to Ramkrishna and also both stayed on the same floor in a residential apartment provided by the exchange. He made several visits overseas, travelling first class. Also, his visa application mentioned him as a confirmed employee, despite him being a consultant.

Whistleblower complaint

In December 2015, Sebi received a whistleblower complaint alleging governance issues in Subramanian's appointment. The market regulator then sought an explanation from the exchange on various points raised in the complaints. The exchange, which was then headed by Ramkrishna, was evasive. Sebi sent several reminders to the exchange. In October 2016, Subramanian was ousted from the exchange. In December 2016, Ramkrishna also stepped down as MD& CEO. Around the same time, Sebi had also received whistleblower complaints against NSE’s colocation (colo) facility. The complaint said that the exchange was granting unfair access to certain brokers and alleged scam worth thousands of crores. The regulator had also begun a probe into these allegations separately. During these probes, the NSE board came to know that Ramkrishna was sharing confidential information about the exchange with an unknown person, with an email ID rigyajursama@outlook.com.

Himalayan Yogi

When the NSE board grilled Ramkrishna about this unknown person. She told them it was her spiritual guru who didn’t have a physical persona and could materialise at will. Between 2014 and 2016, Ramkrishna discussed internal confidential information of NSE such as the organisational structure, dividend scenario, financial results, human resources policy and related issues, response to regulator with this purported guru. Later, NSE ordered a forensic investigation, conducted by Ernst & Young (EY), to look into the issue of information sharing with an unknown person. The EY report, submitted in 2018, concluded that the guru was none other than Subramanian.

Arrest follows questioning

On February 11, 2022, the market regulator issued an order against former NSE MD & CEO Chitra Ramkrishna alleging misgovernance. The order created a storm as it alleged that Ramkrishna, during her stint at the country’s largest bourse, was constantly sharing confidential information with an outsider. The CBI started questioning Ramkrishna, Subramanian and various others over the issues raised in the order. Subramanian’s arrest follows days of questioning by the CBI.

Four-year old FIR

The latest questioning was done on the basis of a first information report (FIR) filed by the CBI on May 28, 2018 in the co-location (colo) matter. The four-year old FIR was filed primarily against Sanjay Gupta of OPG Securities, a broking outfit alleged to have got unfair access to NSE's colo facilities. The FIR also named unknown officials of the NSE for their role in the colo controversy. Market observers say the arrest by the CBI was made after the central agency came under pressure to crack down on the case. While Sebi has been criticised for delay in passing the order in the Ramkrishna matter, CBI too, had taken little action after filing the FIR nearly four years ago.