The eminent “Yes” man at SEBI – C B Bhave allowed NSE co-location scam

The biggest scam in independent India is the NSE scam and many don't even know about it!

The biggest scam in independent India is the NSE scam and many don't even know about it!
The biggest scam in independent India is the NSE scam and many don't even know about it!

Mr. Bhave, you said that the buck stops with you as SEBI Chairman. Now, walk the talk.

PGurus, based on its research and material, in a new series on NSE co-location Scam, will unearth the roles of key persons with a certain illustrative list of questions, the answers to which every citizen has a right to know.

PGurus, before publishing this part of the series had emailed Mr. C B Bhave a list of questions to explain his patronage of the NSE co-location scam during his tenure as SEBI Chairman. Since Mr. Bhave has not deigned to reply, I, the Editor of PGurus, am going to present you the data and my interpretation of it. Follow the data, to get to the truth.

The scam

The premiere stock exchange of the country, the National Stock Exchange (NSE) has found itself embroiled in a multi-billion-dollar co-location scam that was brought to light by a whistleblower’s complaint to the market regulator, Securities, and Exchange Board of India (SEBI).[1]

NSE started offering its co-location services since 2009. This was the beginning of the largest white-collar scam in the history of independent India which we are witnessing today.

NSE, by offering co-location services violated the two basic, fundamental principles on which it was granted recognition to operate as an Exchange. The principles were Transparent Price Discovery & Fair & Equal Access Opportunity.

SEBI decided to remain silent and allowed NSE to function against the fundamental principles. Mr. C B Bhave was the SEBI Chairman at the relevant time. The tenure of Mr. Bhave as SEBI chairman was from 2008 – to 2011.

SEBI being a market watchdog, with power concentrated at the hand of the Chairman, has prime responsibility to ensure fair and equal market access. which it miserably failed to do under Mr. C B Bhave as SEBI Chairman.

The SEBI, without any discussion paper, formal report, or market consultation, simply permitted NSE to offer co-location. It was as if NSE is a mom-and-pop shop that is free to do anything[2]. It is equivalent to allowing someone in RBI mint or BARC to do whatever he wants with the printing machine in RBI mint or atomic machine in BARC, without the approval of the RBI Governor or the Government.

The appointment of Bhave as SEBI Chairman smacks of suspicion

Prior to becoming SEBI Chairman, Bhave was the Chairman and MD of NSDL (a subsidiary of NSE) from 1996 to 2008. As Chairman & MD of NSDL, he was found guilty in the NSDL IPO scam[3]. While the SEBI was investigating the NSDL IPO scam, Mr. Bhave, out of turn got appointed as SEBI Chairman.[4]

What is interesting about his appointment is that he had not even applied for the post, nor was he amongst the shortlisted candidates by the Central Government to be appointed as SEBI Chairman. Still, the C-Gang prevailed on the Appointment Committee Members to get Mr. Bhave appointed as SEBI Chairman.

C-Gang Head Honcho’s role in the appointment

Many who were in the Finance Ministry then told me that the then Finance Minister, P Chidambaram (PC) insisted on Bhave’s appointment and threatened to resign if his boss, Prime Minister Manmohan Singh gave an extension to the outgoing SEBI Chairman, Melvittil Damodaran. “It is either him or I,” PC is rumored to have thundered. PC was so powerful that the PM backed down.[5]

Was this little drama played out to ensure that Mr. C B Bhave be appointed as SEBI Chairman only to allow NSE to start its co-location services which no prudent SEBI Chairman would have ever permitted?

The appointment of Mr. Bhave as SEBI Chairman despite being named in the NSDL IPO scam was nothing but a quid pro quo arrangement wherein he was to remain silent and allow NSE to start co-location against which he was to be given clean chit in NSDL IPO Scam, which he eventually got.

Why were Mohan Gopal and V Leeladhar overruled?

When the NSDL IPO scam broke out, SEBI formed a committee, comprising of the then SEBI board members G Mohan Gopal and V Leeladhar, in 2008 to investigate NSDL’s role in the IPO scam and it found various lapses on the part of the depository, as also the SEBI itself.[6]

Dr. K P Krishnan and Mr. T V Mohandas Pai played a key role in giving a clean chit to Mr. Bhave by declaring the report of Mr. Mohan Gopal and Mr. V Leeladhar against NSDL and Bhave, Non-Est., i. e. null and void[7]. The investigation agency should call Mr. Mohan Gopal and Mr. V Leeladhar to get more insights into the role of Mr. C B Bhave and Dr. K P Krishnan.

A question of market integrity

Today, the same NSE co-location has turned into a mammoth fraud and has impacted the integrity of Indian financial markets. It is the largest white-collar crime in the history of Independent India. Mr. Bhave had once stated before the media that being the SEBI Chairman, the buck stops with him. Now, it is time to walk the talk, Mr. Bhave.

It is a fallacy on the part of Mr. Bhave, who recently, attempted to divert the investigation by stating that the co-location scam pertains to the period 2015 and therefore he has no role in it[8]. In fact, the fact remains that NSE started offering co-location from 2009 which was during the tenure (2008 to 2011) of Mr. Bhave as SEBI Chairman.

Appointing Mr. C B Bhave as SEBI Chairman is the point of origin from where the NSE co-location began. Mr. Bhave is the “SUTRADHAR” of the FRAUD TO THE NATION.

To unearth the role of the real perpetrator of the co-location scam, it is imperative for the CBI and other investigation agencies to seek answers to some of the pertinent question from Mr. Bhave, the SEBI Chairman.

  1. Why did Mr. Bhave allow NSE to offer co-location?
  2. Why was Mr. Bhave selected as SEBI chairman when he had neither applied for the post nor was he on the list of shortlisted candidates?
  3. Why was Mr. Bhave selected as SEBI chairman despite his involvement in the NSDL IPO scam? What was the quid pro quo arrangement worked out for getting the post of SEBI Chairman?
  4. For M S Sahoo & K M Abraham to remain silent, what was the quid pro quo arrangement? Why were they given flats in Kohinoor City? Who gifted it? Was it NSE or someone else?
  5. Why did K P Krishnan & Mohandas Pai make the report of Mohan Gopal & V Leeladhar on NSDL non-est? Why was K P Krishnan so interested in getting the legal opinion from the Law Ministry?
  6. Why did K P Krishnan participate in SEBI Board meetings despite the Ministry of Finance in its Press Release of Feb 2008 clearly stating: “Neither Shri Bhave who was heading NSDL nor the nominee of the Ministry of Finance on the SEBI Board will be involved in this special arrangement”?
  7. Why was the report of Mohan Gopal and V Leeladhar never made public?

To be continued…


[1] Rs 50,000 or Rs 75,000 crore? NSE co-location scam still a mystery six years onMar 13, 2022, New India Express

[2] All you need to know about the NSE colocation caseFeb 16, 2022, Money Control

[3] Controversies in the life & time of ex-chairman of Sebi CB BhaveNov 14, 2011, ET

[4] Sebi to take action against NSDL for 2003-05 IPO scamMay 10, 2011, One India

[5] PM chose Bhave as Sebi chief on Chidambaram’s adviceNov 13, 2011, ToI

[6] Sebi to discuss afresh NSDL’s role in IPO scamJun 26, 2011, ET

[7] Tribunal quashes Sebi order against NSDL in IPO scamAug 06, 2013, ET

[8] CBI must apologise if enquiry fails, says former Sebi chairman CB BhaveMar 17, 2014, ET

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An inventor and out-of-the-box thinker, Sree Iyer has 37 patents in the areas of Hardware, Software, Encryption and Systems.

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  1. Bhave was in hand in glove with the C-gang? Giving him the SEBI chairmanship is the best option to keep not only silent for the past deeds but also for the loot that happened after the colocation.
    Does Mohandas Pai, who is a strong BJP supporter also has his hand in the cookie jar? Shree, you should invite him and ask the question. Put him on the spot.
    If PGuru can unearth so much of loot, why the current govt is unable to see anything wrong ? IS BJP a “National” looters as the Congress is “anti-national” looters.


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