The Enforcement Directorate’s (ED’s) chargesheet in the National Stock Exchange (NSE) illegal phone-tapping case points to insider trading during the tenures of Chitra Ramkrishna and Ravi Narain as managing director and chief executive officer of the bourse.
The federal agency will soon be sharing the details with the Securities and Exchange Board of India (SEBI) for further inquiry, two people aware of the findings told Business Standard.
The ED, which filed its prosecution complaint (commonly known as chargesheet), alleged that Narain and Ramkrishna were the “key conspirators” and had assisted iSec Services to generate money to the tune of Rs 24 crore for exchanging crucial information, the people said.
iSec Services, which allegedly tapped phones of NSE employees, was purportedly engaged under the garb of conducting a periodic study of cyber vulnerabilities at the exchange.
“While processing transcripts of phone calls during its ongoing money-laundering probe, the agency has come across possible instances of price-sensitive information being leaked to gain undue advantage.
"Also, some evidence is indicative of insider trading by certain entities which requires a detailed probe by the regulator,” one of the two people cited said.
Narain and Ramkrishna, along with former Mumbai police commissioner Sanjay Pandey, who floated iSec, have been named as accused in the ED chargesheet.
Narain, arrested a few days before the chargesheet was filed, had allegedly conspired with iSec in the tapping case from the beginning.
He was MD and CEO of the exchange from April 1994 to March 31, 2013, and was later appointed vice-chairman, in the non-executive category, to the board. He resigned on June 1, 2017.
The ED arrested Ramkrishna in the alleged phone-tapping case in July, while the Central Bureau of Investigation (CBI), which is also probing these cases, had arrested her in the co-location case. It also arrested Pandey in the case in July.
The ED chargesheet is learnt to have also highlighted its findings on whether the current management or auditors raised the red flag or if they enquired about such contracts while destroying iSec-related evidence.
The contract with iSec was terminated in February 2017, within two months of Ramkrishna’s exit as CEO, sources said. The new management came in July that year.
The surveillance set up by iSec was disposed of as e-waste in 2019.
It has been argued that iSec was not appointed a statutory auditor but was for a special project.
The project was “periodic study of cyber vulnerabilities” at the NSE, and the contract value was Rs 4.45 crore.
When iSec was set up, Pandey was not in the Indian Police Service and he quit as director in 2006.
His mother and son are directors in the company.
iSec was one of the firms that had carried out audits at the NSE when the colo case happened.