The Securities Appellate Tribunal (SAT) Quashes SEBI’s Order Against NSE in Dark Fibre Case
The Securities Appellate Tribunal (SAT) has overturned the Securities and Exchange Board of India’s (SEBI) penalty against the National Stock Exchange (NSE) and its former CEO, Chitra Ramkrishna, in the dark fibre case. The tribunal has nullified the Rs 7 crore penalty imposed on NSE by SEBI and reduced Ramkrishna’s penalty from Rs 5 crore to Rs 25 lakh.
Allegations of Irregularities in Dark Fibre Connectivity
SEBI initiated an investigation following complaints regarding alleged irregularities in certain brokers availing point-to-point dark fibre connectivity from Sampark Infotainment. The regulator examined transactions between 2009 and 2016, focusing on NSE’s alleged preferential treatment towards W2W and GKN. These brokers were allowed to use Sampark’s services for laying dark fibre cables without the necessary license from the Department of Telecommunication.
This arrangement gave W2W and GKN a latency advantage over other brokers who did not have access to Sampark’s services. NSE denied requests from other brokers to engage Sampark for providing point-to-point connectivity.
SAT’s Order Cites Lack of Cooperation as Reason for Overturning Penalties
SAT stated that there was no evidence of lack of cooperation from NSE during inspections or interactions with SEBI officials. They concluded that a bonafide response from NSE does not warrant a penalty for lack of cooperation.
Regarding Ramkrishna, SAT acknowledged her negligence as Managing Director and CEO of NSE but deemed the penalty of Rs 1 crore each as arbitrary and excessive.
Hot Take: SAT Overturns SEBI’s Penalty, Citing Lack of Cooperation from NSE
The Securities Appellate Tribunal (SAT) has quashed SEBI’s penalty against the National Stock Exchange (NSE) and its former CEO, Chitra Ramkrishna, in the dark fibre case. SAT cited lack of evidence for lack of cooperation from NSE as the reason for overturning the penalties. While NSE’s penalty was completely set aside, Ramkrishna’s penalty was reduced from Rs 5 crore to Rs 25 lakh. This ruling highlights the importance of cooperation and a bonafide response during regulatory investigations.
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