In a letter to BK Gupta, a DGM at market regulator SEBI (Securities and Exchange Board of India) dated January 14, 2015, an unnamed whistle-blower blew the lid off what he alleged was massive technical manipulation of the National Stock Exchange (NSE). Claiming to be based out of Singapore and working for a hedge fund, the whistle-blower said that the manipulation allowed some players to procure unfair advantage over others.
The letter, which was also copied to Sucheta Dalal of Moneylife has been published by the news portal here. The whistle-blower says that the system is being manipulated to benefit a few select firms which can then make several crore rupees in illegal profits. The letter goes into painful technical detail to explain the entire alleged manipulation.
With the letter in their possession, Moneylife did not publish immediately. They decided to verify facts before putting it out.
Nearly five months after they received the letter, and having run it through several stakeholders of the stock exchange but with no proof forthcoming, they decided to ask the SEBI and management of the NSE what action they had taken following the whistle-blower’s letter.
Sucheta Dalal’s first email to the SEBI Chairman UK Sinha, copied to NSE’s CEO Chitra Ramakrishnan and Vice-Chairman Ravi Narain was sent on June 11, says Dalal. She also followed it up with a reminder on June 15. Since no response followed, Moneylife published an article on the whistle-blower’s account on June 19.
On July 21, NSE filed a lawsuit against Moneylife for defamation seeking damages of Rs. 100 crore.
While the NSE was mum initially,even after the report was published, what seemed to have irked them into going after the journalists is the pressure from all sides, including parliamentarians and the Union government, to investigate the matter further. In fact, the whistle-blower himself says in his letter, “The most shocking aspect is that when the matter came to knowledge of NSEs management team they have chosen to hush up the matter under the carpet rather than coming out in open against the same.”
Dalal says that the lawsuit amounts to harassment by the NSE. “If they were really bothered about the defamation, they should have responded to our repeated queries. And if they didn’t respond, then the lawsuit is only meant to harass us financially and gag us from writing about it,” says Sucheta Dalal, speaking to The News Minute.
She also says that it is easy for big corporate houses to file defamation suits seeking massive amounts in damages as it does not cost them much. The litigation costs and the effort to fight the cases can however drain out smaller media organizations.
More importantly, she says that this not just Moneylife’s battle to fight.
Just last month, Essar group had filed a lawsuit against The Caravan magazine seeking Rs. 250 crore in damages for publishing an article exposing the business practices of the group. Essar had refused to answer a detailed questionnaire sent to the magazine before publishing.
“This is not just about us, it is about freedom of expression of the media,” says Dalal adding, “Because of the power of ads and PR, we work under a lot of pressure. Business groups have the power of hundreds of crore rupees worth of ad-spend. To write against them is not easy, yet we are doing it. But there are has been very little help forthcoming from others,” says Dalal.