Notice to SEBI and CBI on NSE scam

A division bench comprising Justice M Sathyanarayanan and Justice N Seshasayee ordered notice to the Securities and Exchange Board of India (SEBI), the Ministry of Corporate Affairs (MCA), the CBI, the Enforcement Directorate (ED) and the NSE, returnable by November 11.

The bench while issuing notice also recorded the petitioner Chennai Financial Markets and Accountability (CFMA) submission. “It is also brought to the knowledge of this court that the CBI has filed the first investigation report in relation to NSE Colo Scam and there appears to be a slow progress in the said investigation and hence came forward to file this writ petition.”

CFMA submitted that the NSE colo scam has tarnished the reputation of a major market infrastructure institution and severely challenged the integrity of the securities market. Millions of investors, mostlyretail investors have suffered huge losses due to relatively delayed dissemination of order book data and in the absence of awareness that some select TM’s were ableto access the order bookdata ahead of them, thePIL said.

Though SEBI is having market regulatory mechanism it failed to take any effective steps to unearth the massive scam, which is one of the biggest financial frauds ever taken place, CFMA said.

The bench also issued notices to the Serious Fraud Investigation Office (SFIO) and the Financial Intelligence Unit (FIU).