SEBI slaps Rs 3-cr fine on former NSE CEO

Mumbai: The former head of the country's largest stock exchange shared confidential information with a yogi and sought his advice on crucial decisions, a probe by the market regulator has found, ahead of the bourse's much-awaited public listing.

In a case of "glaring breach" of regulations, Chitra Ramakrishna, the former chief executive of National Stock Exchange (NSE), shared information including the bourse's financial projections, business plans and board agenda with a purported spiritual guru in the Himalayas, the Securities and Exchange Board of India (SEBI) said.

"The sharing of financial and business plans of NSE ... is a glaring, if not unimaginable, act that could shake the very foundations of the stock exchange," SEBI said in an order, imposing penalties on Chitra Ramakrishna, the bourse and other top former executives for the lapses.

Chitra Ramakrishna, who quit NSE in 2016 citing "personal reasons", was not immediately reachable for comment. NSE and SEBI did not respond to requests for comment. Allegations of corporate governance lapses have dogged NSE for several years. The exchange had planned to go public in 2017 but its listing was derailed by allegations officials had provided some high frequency traders unfair access through co-location servers, which could speed up algorithmic trading.

After a three-year investigation, SEBI fined the exchange over $90 million and barred it from raising money on securities markets for six months. NSE challenged the order in court and has sought SEBI's approval to file for a new IPO. However, during that investigation, SEBI found documents showing Chitra Ramakrishna's emails to an unknown person, who she said during questioning was a "spiritual force" she had sought guidance from for 20 years.

The SEBI probe also found the purported guru had substantial influence over the appointment of a mid-level executive, without any capital market experience, directly as an adviser to Chitra Ramakrishna with inadequate documentation and a salary higher than most senior NSE officials.

Chitra Ramakrishna, in her defence, told SEBI that sharing of information with the person who was "spiritual in nature" did not compromise confidentiality or integrity.

The guru was running the exchange, and Chitra Ramakrishna was "merely a puppet in his hands", the SEBI said. SEBI also said NSE and its board were aware of the exchange of confidential information but had chosen to "keep the matter under wraps".

The regulator fined NSE 20 million rupees ($270,000) and has barred the exchange from launching any new products for six months. SEBI imposed a penalty of 30 million rupees on Chitra Ramakrishna and barred her from any bourse and SEBI-registered intermediary for three years.

Chitra Ramakrishna was among a group of executives who in the early 1990s started NSE as a challenger to the more established BSE Ltd, then known as Bombay Stock Exchange. She was appointed joint managing director of NSE in 2009 and promoted to CEO in 2013.