SAT sets aside SEBI’s ₹624 cr disgorgement order against NSE, former bosses

The Securities Appellate Tribunal (SAT) on Monday set aside ₹624 crore disgorgement order against the National Stock Exchange (NSE) by the capital markets regulator SEBI (Securities and Exchange Board of India) in 2019, thus providing relief to both the NSE and its former MD and CEO Chitra Ramkrishna.

"We set aside the order of the WTM directing disgorgement of an amount of Rs.624.89 cores along with interest at the rate of 12% p.a. against NSE," the SAT order stated.

It said directions given by the SEBI prohibiting NSE from accessing the securities market, directly or indirectly, for six months and, further, directing it to carry out system audits at the frequent intervals after a thorough appraisal of the technological changes introduced from time to time is "affirmed".

The appellate tribunal also directed the NSE to deposit ₹100 crore for failing to carry out due diligence. "We direct NSE to deposit a sum of Rs.100 crores to the Investor Protection and Education Fund created 230 by SEBI. This amount will be adjusted by SEBI pursuant to the deposit already made by NSE vide our interim orders dated 22nd May, 2019 and 17th May, 2021."

The order said the excess amount along with the interest accrued will be refunded by SEBI within six weeks. "The appeal of NSE is partly allowed," the order stated.

The SAT also set aside the direction to disgorge 25% of the salary from former NSE CEO Ravi Narain and Chitra Ramkrishna. "The direction to disgorge 25% of the salary from Mr. Ravi Narain and Ms. Chitra Ramkrishna is set aside."

Their debarment also has been curtailed to the period already undergone by them. The order said the direction prohibiting Narain and Ramkrishna from associating with any listed company or a market infrastructure institution or any other market intermediary for five years is set aside and substituted for the period undergone by them. The appeals for both are allowed, it said.

The appellate tribunal also upheld all findings against OPG Securities. "However, the direction of the WTM (SEBI) directing OPG and its Directors to disgorge Rs 15.57 crore, alongwith interest at the rate of 12% p.a. from 7th April, 2014 onwards is set aside," the order stated.

The order said the matter is remitted to the SEBI to decide the quantum of disgorgement afresh in the light of the observation made above within four months from today. The SAT directed SEBI to consider the charge of connivance and collusion of OPG and its directors with any employee or officials of the NSE.

The matter pertains to SEBI's April 2019 order against the NSE, in which the stock exchange was asked to pay ₹624 crore, along with 12% per annum interest with effect from April 1, 2014, to the Investor Protection and Education Fund for violations of SECC (Stock Exchanges and Clearing Corporation) rules.

Notably, the Delhi High Court in September 2022 had granted bail to Ramkrishna and ex-group operating officer Anand Subramanian in the 2015 co-location scam case, in which some of the traders were allegedly provided preferential access to trade data.