CBI files case against three for exploiting NSE systems

Live Mint: May 30, 2018

The Central Bureau of Investigation (CBI) on Wednesday registered a case against three persons for allegedly manipulating the server architecture of the National Stock Exchange (NSE), Mumbai, to glean out data before other brokers.
The CBI registered a case against OPG Securities Pvt Ltd owner and promoter Sanjay Gupta, as well as his brother in-law Aman Kakrady, and Ajay Narottam Shah, who facilitated Gupta’s operations by developing and providing a software called Chanakya. A case was also registered against OPG Securities, OPG House and unknown officials of the Securities and Exchange Board of India (Sebi) and NSE.
“The CBI registered a case under the Indian Penal Code (IPC), the Prevention of Corruption Act, and under section 66 of the Income Tax (IT) Act against the accused,” a senior CBI official said, on condition of anonymity.
“It was alleged that Sanjay Gupta of OPG used the server architecture of NSE in collusion with unknown officials of NSE, Mumbai. These officials had provided unfair access to OPG by using co-location facility during 2010-12 that enabled it to login first to the server of the stock exchange that helped it (OPG) to get the data before any other broker in the market,” the official added.
It was alleged that after “introduction of load balancer in October 2012, Sanjay Gupta once again managed staff at the data center at NSE and was provided fast access to the market feed to OPG securities. This favour was shown by unknown officials of NSE to Sanjay Gupta.”
Calls to Sanjay Gupta and Ajay Shah were not answered, while neither Sebi nor NSE immediately responded to Mint’s messages seeking a response.
CBI also added that in order to ensure a favourable report from Sebi in the inquiry carried out by it against the role of OPG in the misuse of TBT (tick by tick) architecture of NSE, Sanjay Gupta “influenced unknown officials of Sebi for which bribe money was given to the unknown officials of Sebi.”
Gupta also allegedly directed his employees to delete some important emails and texts related to the co-location controversy with the intention of destroying electronic evidence against his company.
“It was also alleged that Ajay Shah had been instrumental in exploitation of NSE’s TBT architecture and collected NSE trade data in 2005-06, in the name of carrying out research. With the help of this data he developed Chanakya, which was also sold to selected brokers, including OPG. It is also alleged that Sanjay Gupta with the help of Kokrady was illegally trading in Dubai, Ghana, Singapore, Hong Kong and China through OPG Securities Ltd,” the senior CBI official quoted above said.
Searches were conducted by the CBI in seven places in Delhi, Mumbai, and Bangalore.

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