Sebi has imposed a penalty totalling Rs 44 crore on 18 entities, including the National Stock Exchange, its business development officer Ravi Varanasi, former MD and CEO Chitra Ramkrishna and her adviser Subramanian Anand along with certain stock brokers in the 'dark fibre' case.
Apart from NSE and its former officials, others penalised by Sebi are stock brokers -- Way2Wealth Brokers and GKN Securities -- Sampark Infotainment and their respective employees.
The regulator has imposed a penalty of Rs 7 crore on NSE, Rs 5 crore each on Ramkrishna, Varanasi and Subramanian Anand, who was group operating oOfficer and adviser to then MD Ramkrishna.
Also, Sebi levied a fine of Rs 1 crore each on Nagendra Kumar SRVS and Deviprasad Singh. Further, Sebi has slapped a fine of Rs 6 crore on Way2Wealth Brokers, Rs 5 crore on GKN Securities and Rs 3 crore on Sampark Infotainment.
They have been asked to pay the penalty amount within 45 days, according to a Sebi order passed on Tuesday.
The case relates to the alleged differential access given to certain broking firms in the form of 'dark fibre' at NSE, to connect across the co-location facilities before other members.
A dark fibre or unlit fibre, with respect to network connectivity, refers to an already laid but unused or passive optical fibre, which is not connected to active electronics and does not have other data flowing through them and available for use in fibre-optic communication.
The regulator initiated a probe with respect to the dealings of the several entities, for the period 2009 to 2016 in the matter of providing connectivity to certain stock brokers by NSE in a manner which may be detrimental to the investors or the securities market.
In its order, Sebi found that Sampark arranged the cabling in the co-location rack of NSE in such a manner that some stock brokers, Way2Wealth Brokers and GKN Securities, had lower latency compared to other trading members connected to Sampark Multiplexer. Such an unfair advantage available with certain stock brokers was in contradiction to various regulations.
Further, NSE was charged with granting preferential treatment to W2W and GKN and depriving the same to other stock brokers by facilitating laying of cable for W2W (by Sampark) so as to provide latency advantage to W2W over other stock brokers.
Also, the exchange was charged with allowing W2W and GKN to continue to avail Sampark connectivity even after finding out that Sampark did not have requisite licence.
In its order, Sebi noted that Ravi Varanasi and Nagendra at the relevant point of time were responsible for operational activities relating to Colo rack allocation as well as processing of Colo requests.
Deviprasad was the vice president of IT operations of NSE and responsibility for ascertaining the eligibility of service providers was vested on the Colo Support Team, which was headed by him.
"W2W (Way2Wealth) and GKN, in collusion with the employees of NSE and Sampark made significant profit due to unfair latency advantage available with them," Sebi said in its 186-page order.
Others penalised by Sebi are -- MR Shashibhushan (Rs 1 crore), Prashanth D'souza (Rs 1.1 crore), Om Prakash Gupta (Rs 1.1 crore), Sonali Gupta (Rs 1.1 crore), Rahul Gupta (Rs 1.1 crore).
Besides, a fine of Rs 10 lakh each was imposed on Netaji Patil, Rima Srivastava, Parshant Mittal and Mohit Mutreja.
In February, the regulator penalised Ramkrishna, Subramanian and others in a case related to alleged governance lapses at the exchange.
Sebi had imposed a penalty of Rs 3 crore on Ramkrishna for alleged governance lapses in a case related to the appointment of Subramanian as the group operating officer and adviser when she was at the helm of NSE as its MD and CEO, as well as for sharing confidential information of the company with an unidentified person.
Apart from penalising Ramkrishna, Sebi had imposed a penalty on Ravi Narain, who was the predecessor of Ramkrishna.