BREAKING: ED arrests former Mumbai CP Sanjay Pandey in NSE phone tapping case

The Enforcement Directorate ED has arrested former Mumbai Police commissioner Sanjay Pandey in connection with a moneylaundering case related to the alleged illegal phone tapping of NSE employees The phone tapping case is also linked with the NSE colocation scam casePandey was arrested under provisions of the Money Laundering Act PMLA after his daylong questioning at the agencys headquarters in New Delhi an official saidHe has earlier been questioned by the agency in another case booked by it to probe the alleged colocation scam at the NSE and at that time July 5 Pandey was seen carrying a bag on his shoulders as he went inside the agencys office from the back gate The ED had last week arrested former NSE MD and CEO Chitra Ramkrishna in the case and had recently told the court that the snooping of phone calls at the NSE was being done from 1997 Pandeys company under scanner in this case was set up in March 2001 Transaction of funds worth about Rs 12 crore allegedly to Pandey and his company are under the scanner of the agencyThe top cop retired from service while holding the post of Mumbais Commissioner of Police on June 30 a charge he held for fourmonths Pandey briefly served as the acting Maharashtra director general of police or the head of the state police force The retired top cop is facing two ED and CBI FIRs the alleged phone tapping case and violation of Securities and Exchange Board of India guidelines in conducting NSEs system auditWhile the ED case in the alleged phone tapping instance is based on the CBI FIR it was the ED that first detected the alleged snooping of phone lines at the bourse while probing the colocation instance and it informed the Ministry of Home Affairs MHA which asked the CBI to study ED findings and probe furtherAs the ED cannot file a criminal complaint under the PMLA on its own the CBI case became a scheduled offence enabling it to file a money laundering caseThe retired IPS officers role is being probed in connection with a company founded by him which the CBI and ED allege has violated SEBI norms in auditing two NSE stock brokers who were using the scamtainted colocation facilityThe CBI FIR registered on May 19 against Pandeys company iSec Services redflags several violations of SEBI circular by the firm in conducting system audit of stock brokers involved in algorithmic trading using the colocation facility The CBI has alleged that iSec services had conducted audits of two high risk brokers SMC Global Securities Ltd and Shaastra Securities Trading Private Limited in a fraudulent manner when the colocation scam was going onThe CBI and ED had arrested Chitra Ramkrishna in the colocation scam case probe too 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 timeThese brokers came in the category of high risk as per SEBI guidelines for using colocation facilities to carry out algorithmic trading in the NSE they saidThe high risk brokers required a system audit of their algorithmic trading system every six months with an auditor only allowed to conduct three successive audits the CBI said The company iSec Services Private Ltd which was founded by Pandey after he resigned from Police Service in March 2001 had audited these traders during 201319 continuously breaking the permissible limit of only three consecutive audits according to the FIRShaastra Securities was audited during the period April 2013March 19 and SMC Global Securities from October 2012 to September 2015 by iSEC Services in breach of SEBI circular dated November 6 2013 it allegedIt is alleged that since the company was not eligible to conduct the audit it used services one Prabhpreet Singh of S Dhawan and Associates on a payment of Rs 5000 each for three audit reports signed by him November 14 2017 and October 14 2015 for Shaastra Securities and October 14 2015 for SMC Global Where the bill for such audit was raised by iSec Services on the trading members and payments for the same were also made to iSEC Services by the trading members the CBI FIR allegedIt appears that to overcome the restriction imposed by SEBI guidelines iSEC services had got the reports for the intervening period signed by Prabhpreet Singh whereas factually the premises were visited by Naman Chaturvedi an employee of iSEC it alleged The CBI has alleged that for all purposes the audit was carried out by iSEC Services and it simply got the reports signed from Singh who never visited the premises of the stock brokersIt is clear that iSEC services had fraudulently issued or got issued security and system audit certificates without carrying out actual audit on the input of a person who was not authorised to carry out such audit the FIR alleged The agency has alleged that reports submitted to NSE by iSec were signed by certified experts where the audits were conducted by Chaturvedi who was not qualified to carry out the system audit Pandey had quit as the director of the company in May 2006 His son and mother later took charge of the companyEarlier Pandey who is currently under the Enforcement Directorates scanner met Maharashtra Chief Minister Eknath Shinde an official said The meeting took place in New Delhi and lasted for 15 minutes he saidWith inputs from PTI