After the Enforcement Directorate (ED) arrested former Mumbai Police Commissioner Sanjay Pandey in connection with a money laundering case linked to the alleged illegal phone tapping of NSE employees, a Delhi court sent the top cop to nine days ED remand.
The retired 1986-batch Indian Police Service (IPS) officer was taken into custody by the federal probe agency after more than seven hours of questioning in the case.
The top cop is facing two ED and Central Bureau of Investigation (CBI) FIRs. One on the alleged phone tapping case and the other in connection to violations of Securities and Exchange Board of India (SEBI) guidelines in conducting NSE's system audit.
Who Is Sanjay Pandey?
Pandey was the Deputy Commissioner of Police (DCP) during the 1992-93 Bombay riots and was credited to have brought the situation under control in a very short period of time.
In 2001, Pandey submitted his resignation from the IPS, which he subsequently withdrew in 2002. However, his resignation was accepted in 2003, against which Pandey moved court.
He returned to the service in 2005, with the intent of availing the voluntary retirement scheme at the end of 20 years of service. However, he was neither granted VRS, nor was he given any posting. Once again he moved court and following a court order, returned to service in 2011.
What Are the Cases Against Pandey?
The retired top cop is facing two ED and Central Bureau of Investigation (CBI) FIRs – the alleged phone tapping case and violation of Securities and Exchange Board of India guidelines in conducting NSE's system audit.
The former police officer is facing cases being probed by the ED as well as the CBI in connection with alleged illegal interception of mobile phones of NSE employees by iSec Services Private Ltd, a company that was founded by him.
The CBI has alleged that iSec Services had conducted audits of two "high risk brokers" in a fraudulent manner when the co-location "scam" was going on.
What Is the Co-Location Scam?
The SEBI had categorised brokers into low, medium, and high risk based on their trading modes and prescribed different norms of conducting system audits according to their risk profiles through various circulars issued from time to time.
Brokers came in the category of high risk, as per SEBI guidelines, for using co-location facilities to carry out algorithmic trading in the NSE and required a system audit of their algorithmic trading system every six months with an auditor only allowed to conduct three successive audits.
The company iSec Services Private Ltd, which was founded by Pandey after he resigned from police service in March 2001, had audited these traders from 2013 to 2019 continuously, breaking the permissible limit of only three consecutive audits, according to the FIR.
The CBI has alleged that for all purposes, the audit was carried out by iSEC Services and it simply got the reports signed from Prabhpreet Singh of S Dhawan and Associates, who never visited the premises of the stock brokers.
What Is Chitra Ramakrishna’s Alleged Role?
The ED arrested former NSE MD and CEO Chitra Ramakrishna on 12 July in the case and had recently told the court that the "snooping of phone calls" at the NSE was being done from 1997.
The CBI alleged that Ramakrishna is “involved in a serious offence affecting the integrity and functioning of the largest stock exchange of our country and the robustness/integrity of financial system.”
(With inputs from PTI.)
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