MUMBAI: The Securities and Appellate Tribunal (SAT) on Monday set aside Securities and Exchange Board of India’s (Sebi) disgorgement order of Rs 625 crore against the NSE in the co-location trading scam. NSE will have to pay Rs 100 crore to Sebi’s Investor Protection Fund for its failure to conduct due diligence, according to the SAT order.
“We set aside the order of the whole-time member (WTM) directing disgorgement of an amount of Rs 624.89 core alongwith interest at the rate of 12% p.a. against NSE,” the SAT order stated. Disgorgement is paying back gains that have been made illegally. In 2019, Sebi passed a series of orders against the NSE and its former chief executives,
Chitra Ramkrishna and Ravi Narain, alleging that the exchange did not exercise due diligence when putting in place a network that allowed high-frequency traders unfair access to some network servers at the exchange. Sebi had ordered the NSE to deposit nearly Rs 1,100 crore, including interest, in an investor fund and barred it from raising money on the securities market directly or indirectly for six months.
It had also asked Narain and Ramkrishna to return 25 % of the salaries they had received during the relevant period. The tribunal ruled that Sebi’s disgorgement was unjust and that the exchange and its former officials did not enrich themselves.
“The direction prohibiting Ravi Narain and Chitra Ramkrishna from associating with any listed Company or a market infrastructure institution or any other market intermediary for a period of five years is set aside and substituted for the period undergone by them,” said the order.
The order also stated that the stock exchange did not make any illicit gains in the co-location case. “The direction to disgorge must be in relation to any transaction or activity, which is in contravention of the provisions of the SEBI Act or its regulations,” SAT said.
NSE asked to pay Rs 100 crore
NSE will have to pay Rs 100 crore to Sebi’s Investor Protection Fund for its failure to conduct due diligence, according to the
SAT order