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Informist, Thursday, Aug 8, 2024

By Rajesh Gajra

MUMBAI – The National Stock Exchange of India has paid a penalty of 10 mln rupees levied by the Securities and Exchange Board of India in the matter of corporate governance at the exchange in an adjudication order on Jun 30, 2022, Managing Director Ashishkumar Chauhan told shareholders in a post-earnings conference call today. The exchange also paid the additional interest component of 2.5 mln rupees.

This follows the withdrawal of two appeals on Jul 24 that the NSE had filed with the Securities Appellate Tribunal against SEBI's orders in the matter, Chauhan said. One appeal pertained to the Jun 30, 2022, order. The other pertained to SEBI's Apr 30, 2019, order in the same matter, where NSE was only directed to take certain remedial measures with regard to the breach of corporate governance norms. The exchange had secured interim stay orders from the tribunal in both appeals, according to Chauhan.

In its Apr 30, 2019, order, SEBI had held that NSE and its former managing directors Ravi Narain and Chitra Ramakrishna had been deliberately negligent, unwilling to recognise evidence, and protective in an "overzealous" manner of offenders in the matter of sharing of confidential and sensitive data with Ajay Shah and Infotech Financial Services. This, according to the markets regulator, indicated an egregious failure of the exchange, Narain, and Ramakrishna, to exercise due diligence and ensure sound corporate governance practices.

In that order, apart from directing Narain and Ramakrishna not to hold any management or board position in any securities market entity, including a stock exchange, for three years, SEBI had directed NSE to take "necessary legal action against Shah, Infotech, and two other entities, for violating a professional service agreement and for misusing date made available to them by the exchange".

NSE's withdrawal of its appeals with the tribunal against this SEBI order implies that it will have to comply with SEBI's direction and take legal action against Shah, Infotech, and four other entities.  End

Edited by Rajeev Pai

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