In the dark-fibre case, SAT rejects the Rs 7 crore fine imposed by SEBI on NSE

The National Stock Exchange (NSE) has been fined Rs 7 crore by the Securities and Exchange Board of India (SEBI) in the dark-fibre case, but the Securities Appellate Tribunal (SAT) has quashed the fine. Anand Subramanian, an ex-official of the exchange, was fined Rs 5 crore by Sebi. Several stock brokers and former officials, including former MD and CEO of NSE Chitra Ramkrishna and Ravi Varanasi, have also been partially exempted from the order of the regulator.

The SAT decision came after 16 appeals were filed against Sebi’s June 2022 order involving 18 entities, including NSE, former officials, and stock brokers. The appellants contested the order on various grounds. The case involves alleged preferential access, known as ‘dark fibre,’ given to certain broking firms at NSE, allowing them to connect to co-location facilities ahead of other members.

Sebi imposed varying penalties on each appellant for violating PFUTP Regulations and Sebi’s circulars, as well as for breaching the Securities Contracts Act, 1956. The investigation, spanning 2009 to 2016, focused on NSE’s provision of connectivity to specific stock brokers in a way that may harm investors or the securities market.

The tribunal observed that SEBI’s Adjudicating officer’s order listed nine charges against NSE, seven of which were identical to those by the whole-time member. In its August 9, 2023, decision, the tribunal overturned seven charges against the exchange. “We have already given our findings against the WTM’s order and therefore hold that the findings given by this Tribunal will squarely apply in the present proceedings against the order of the AO to the said noticees,” SAT maintained.

SEBI imposed a Rs7 crore penalty on the NSE. The tribunal, however, overturned the ruling. While quashing the Rs1 crore penalty imposed on Ravi Varanasi, Nagendra Kumar, and Devi Prasad Singh, all top officials of the NSE, the panel upheld a Rs5 lakh fine imposed on these three under Section 15HB of the SEBI Act.

While quashing a Rs 3 crore penalty imposed on Chitra Ramakrishna, former MD and CEO of NSE, SAT reduced the Rs 1 crore penalty imposed on her under Section 15HB of the SEBI Act to Rs 25 lakh.

The tribunal also lowered the Rs1 crore penalties imposed on Way2Wealth Brokers Pvt. Ltd. and M.R. Shashibhushan to Rs20 lakh and Rs10 lakh, respectively.


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