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Special Court Accepts CBI Closure Report in NSE Co-Location Case
NSE Co-Location Scam: Special Judge Gagandeep Singh, while accepting the report, said that it is the responsibility of NSE and SEBI to protect the interests of investors. Just making rules is not enough, strict implementation is also necessary. If the process of audit and rules remains limited to paper, then the confidence of common investors may be shaken.
The CBI closure report has been accepted by the special court in a case of NSE (National Stock Exchange) co-location 'scam'. This case involved a company founded by former Mumbai Police Commissioner Sanjay Pandey, which had audited two stockbrokers.
In the 'co-location facility' of NSE, certain brokers were permitted to place their servers within NSE's data center directly. This enabled them to access details about share prices earlier than regular investors and other brokers. It was claimed that this building was abused, and certain brokers achieved unequal benefit. Sanjay Pandey's firm, I-Sec Services, had audited two large brokers, SMC Global and Shastra Securities, between the years 2013 and 2015. It was claimed that this audit was merely paperwork and was carried out in order to conceal the actual deficiencies.
The CBI admitted in its final report that SEBI (Securities and Exchange Board of India) rules were violated. But the agency did not find any concrete evidence to prove that the audit was done with the intention of deliberate fraud. Also, it could not be proved that due to these audit flaws, any irregularities like circular trading or 'pump and dump' scam took place in the stock market. The investigation also revealed that at that time, SEBI did not have such strict provisions through which phone calls or other records could be kept safe for a long time.
