Market Yogi!

Hello Readers

 

I hope you all are doing well.

  

Good morning! It's good to be blogging after some time, 

 

Today I want to discuss with all of you something important.

 

You know, I like to follow the capital markets and am a market enthusiast.

 

So, for people like us, we always look up to some top brass in the industry; what I mean is suppose we want to invest in the capital market product, I look up to Mr. Warren buffet or in India the big bull Mr. Rakesh Jhunjhunwala.

 

We would also trust the organizations who help us in the investment banking world. So, for example, the NASDAQ, NYSE, DOW JONES, at a global and local level, we have the National stock exchange (NSE) and the Bombay stock exchange (BSE).

 

NSE, which was incorporated some 30 years ago, and s a matter of fact, was the world's largest derivatives exchange in 2021 by several contracts traded based on the data by the future industry association (FIA), a derivatives trading body.

 

The trading experience is good; it can earn an extra buck or even turn into a business.

 

But off late, NSE has been in the news for some wrong reasons.

 

I am sure many of you already know about it; one of the founding members of NSE, Miss Chitra Ramakrishna, is accused of violation of key governance policies of NSE, which is now identified by SEBI (Securities exchange board of India) the market regulator in India.

 

This is what happened: Report from money control.com.

 

In the NSE drama that is being staged, there are various actors.

Just so that you don't lose track of them, here's a quick reference on the dramatis personae–the accused and the acquitted, and then there were those under fire for not doing a good job.

 

Here's one curious fact before you start reading. The firm hired to do the secretarial audit of NSE and who raised the matter of the irregular hiring–of former Group Operating Officer (COO) Anand Subramanian–is named SN Anantha Subramanian & Co.

 

So, the investigator and the investigated shared highly similar names—just another absurdity in this string of absurdities. 

 

Chitra Ramakrishna

 

She was praised and awarded for being the first woman to lead a stock exchange and being part of NSE's founding team. 

 

That was three decades ago. Today, she stands accused of corporate misgovernance for allowing an outsider to run the exchange by proxy and making an inexplicable hire for a senior management post, paying a salary disproportionate to his experience. 

 

These were revealed when the regulator was investigating the co-location scam, in which the NSE was accused of giving some brokers preferential access to price feeds. As a result, the former MD and CEO of the NSE resigned in 2016 and has been fined Rs 4 crore in all. 

 

Ravi Narain

 

The former vice-chairman of the exchange had been feted in the early years too, much like Ramakrishna, for founding NSE. However, in June 2017, he stepped down from his VC position after the co-location investigations.

 

 As early as October 2016, he had been made aware of the email exchanges between Ramakrishna and the yogi. But SEBI's order noted that he didn't oppose the serious governance lapses and didn't record this in the meeting minutes held on November 29, 2016, citing confidentiality. 

 

He has also been accused of making incorrect and misleading submissions to SEBI regarding the appointment of former Group Operating Officer Anand Subramanian and faulted for allowing Ramakrishna an honorable exit, even recording an appreciation for her in a Board meeting held on December 2, 2016. As a result, the regulator has fined him Rs 2 crore. 

 

VR Narasimhan

 

The former Chief Regulatory Officer and Compliance Officer has been fined Rs 6 lakhs for furnishing incorrect and misleading submissions before SEBI. He had claimed there had been no violation of SECC Regulations, 2012, in the appointment of Subramanian. But under regulations, Subramanian's role would fall under the Key Managerial Personnel (KMP) function since he had department heads reporting to him, which required his hiring to be cleared by the Nomination and Remuneration Committee (NRC) and the Board. Narasimhan was found wanting to exercise due diligence in the performance of his duties. 

 

Anand Subramanian

 

According to the regulator's order, the former GOO of NSE misled SEBI about his recruitment appointment. During the investigation, he had claimed that he had applied for the job through an HR consultant, but that was found to be false when set against testimonies from Ramakrishna and Chief People Officer at NSE, Chandrasekhar Mukherjee. The SEBI also found him guilty of deliberately downplaying his position to avoid the scrutiny of the Board and NRC; and conniving with the 'yogi' to manipulate Ramakrishna. As a result, he has been fined Rs 2 crore. 

 

J Ravichandran

The Group President of NSE and Company Secretary was accused of ignoring alarms repeatedly raised by the secretarial auditor regarding the appointment of Subramanian. The auditor had said that the hiring should get the NRC and the board's clearance. 

 

But the SEBI order found that the accusations against Ravichandran did not hold because he had forwarded the concerns to Ramakrishna and Mukherjee and had passed on Mukherjee's replies to the auditor. 

 

Mukherjee had replied that Subramanian is a consultant, not on the roles of the NSE, and therefore is not holding a Key Management Personnel function, which would require the NRC/Board approval. 

 

The SEBI also found Ravichandran fault-free because the hiring of Subramanian had been raised at the Board meeting after the red flag was raised. 

 

Public Interest Directors

The SEBI appoints Public Interest Directors (PIDs), who act as Independent Directors, to ensure that the company's actions do not compromise the interests of the investors in the securities market. 

 

 The SEBI noted that none of the NSE's PIDs informed the regulator when the NSE Board failed to act with integrity and put the reputation of the stock exchange in jeopardy.

 

The following were the PIDs who had been informed–from Board meetings held on October 21, 2016, and on November 29, 2016–about Subramanian's irregular hiring and Ramakrishna emailing the 'yogi' and sharing confidential information with this unknown person. 

 

*Mohandas Pai is a Padma Shri Awardee and former Board Member of Infosys. According to an annual report of NSE from 2020, he was given a yearly compensation of Rs 23,50,000 for attending board and committee meetings.

 

*Naved Masood is the former secretary at the ministry of corporate affairs. The annual report drew a yearly compensation of Rs 30,25,000 for attending board and committee meetings. 

 

*Dinesh Kanabar is KPMG India's former Deputy CEO and CEO of Dhruva Advisors. The report says that he was given an annual compensation of 28,75,000 for attending the meetings.

 

This is just one of the articles. After doing some deep research, I thought I would share it with you.

courtesy Google images

 

The most disappointing part in all of this and the fundamental question that I get is:

 

The SEBI expects the commoner, the Aam aadmi of this country, in this case, let us fix our premise to a investor, to be transparent to a level that you can see through him, but doesn't return you the favor? And it is so opaque and takes from 2016 till 2022 to finish an inquiry and finally decides to go public on it?

 

Imagine the mind of a young person in India who is just amazed about the stock market and just started investing or trading in 2022, even though his family is unsure. They are reluctant to allow their children to enter the markets as the ghost of Mr. Harshad Mehta, the Robinhood of the stock market still haunts the minds of our parents as they saw it as it was happening.

 

Now, this happens what would be this person's confidence, think.

 

Think, why did the policymakers did not hire competent people for a responsible job?

 

A capital market's momentous decision, dictated by a Yogi? What next?

 

I am hoping to see the light at the end of this tunnel.

Courtesy -  google images

 but I would urge all my readers to share this piece with as many people as it is essential to all of us and your great country.

 

Do not lose hope; keep investing and trading; let us make this a market is driven by values steered by intellect and discipline.

 

Foreign institutional investors drive the Indian stock market (FIIs'); let us make it domestic investors. 

 

Have a nice day.

 

Helios.