SAT overturns SEBI’s punishment of NSE and former CEOs in the Co-location case

The Securities Appellate Tribunal (SAT) has overturned market regulator SEBI’s order of February 2021. The Securities and Exchange Board of India (SEBI) had imposed a penalty of Rs 1 Cr on the NSE and a separate penalty of Rs 25 lakh each on the exchange’s former chiefs Ravi Narain and Chitra Ramakrishna.

The Co-location case concerns the claimed privileged access granted by NSE to a select group of brokers to frequently connect to its secondary servers. In his order issued in 2019, Sebi’s full-time member accused the National Stock Exchange of failing to ensure, among other things, that trading was fair, transparent, and open and demanded that the exchange disgorge Rs 625 crore. Along with asking Narain and Ramakrishna to forfeit 25% of their salaries, the Sebi member also forbade them from working for any publicly traded company or institution linked with the market. The Securities Appellate Tribunal overturned the Sebi order against the NSE and its two former CEOs in January this year.

However, it required NSE to contribute 100 crore to the investor protection and education fund of the Sebi. The Adjudication Officer (AO) of Sebi issued decisions against NSE and its two former chief executives based on the same issue and the same cause of action, according to the Securities Appellate Tribunal.

“In our view, a violation cannot be subject to two punishments. The two-member bench led by Justice Tarun Agarwala stated, “Since we had already imposed a penalty of 100 crore upon NSE, which in our opinion is more than sufficient. The SAT stated on the fine imposed on Narain and Ramakrishna: “We find that no further directions are required to be issued and the imposition of penalty in the circumstances is unwarranted.” While confirming OPG Securities’ infractions, the tribunal has requested that Sebi reevaluate the severity of the penalty.