The Central Bureau of Investigation has arrested Delhi-based broker and OPG Securities’ Managing Director Sanjay Gupta in the NSE co-location case.
The move comes four years after the CBI registered a First Information Report against him for alleged preferential access to the markets through the National Stock Exchange’s co-location facility, officials said. CBI carried out searches and arrested Gupta from his office in Mumbai on Tuesday evening, they said.
The CBI had earlier arrested former NSE CEO and MD Chitra Ramkrishna and Group Operating Officer Anand Subramanian in connection with the case and both are in judicial custody since March.
According to officials, Gupta has managed to get access to a Mumbai-based syndicate to allegedly influence SEBI officials probing the NSE co-location scam. They said the syndicate members had assured Gupta of managing SEBI officials on his behalf, they said.
The agency also had information that Gupta had attempted to destroy some key evidence in the case which necessitated his arrest after four years, they said.
The CBI has alleged that Gupta was one of the main beneficiary of the co-location facility started by the NSE which helped him get favourable access to the market over other brokers through multiple logins and access to secondary servers giving him crucial time advantage and resulting in a multi-fold increase in profits of his company in just two years.
Selected players had market price information before others as the stock market was using tick-by-tick technology in algorithm-based trading and co-location services of which Gupta was a beneficiary. The facility allowed the users to get access to the prices ahead of others, officials said.
The probe has so far established that from 2010-15, when Ramkrishna was managing the affairs of NSE, OPG Securities, one of the accused in the FIR, had connected to the secondary POP server on 670 trading days in the Futures and Options segment, the CBI has alleged.
The officials said investigation is going on in the alleged role of the then senior NSE officials, who were looking into the co-location matter, which is understood to have given ‘unfair advantage and wrongful gain’ to certain stock brokers — including OPG Securities — at the cost of others.
The officials said NSE’s co-location facility was a “major policy decision” in which the then MD and CEO and other senior officials would have played a “decisive role”. The CBI probe has shown that Ramkrishna was appointed as Joint MD in 2009 and remained in the position till March 31, 2013, with the power of DMD. She got elevated as MD and CEO on April 1, 2013.
The agency has also alleged that Muralidharan Natarajan, the CTO of NSETECH (a subsidiary of NSE), who was responsible for setting up co-location architecture at the NSE , was directly reporting to Ramkrishna.
Ramkrishna, who succeeded Ravi Narain in 2013, had appointed Subramanian as her adviser who was later elevated as group operating officer and was receiving a fat pay cheque of Rs 4.21 crore annually.
On Fed. 25 this year, the CBI arrested former NSE group operating officer Anand Subramanian. Later, Ramkrishna was also taken into custody. SEBI had on Feb. 11 charged Ramkrishna and others with alleged governance lapses in the appointment of Subramanian as the chief strategic adviser and his re-designation as group operating officer and advisor to the MD.