NSE Co-location: 11 Brokerages, 2 FPIs under I-T Scanner

The income-tax department is looking into the accounts of 11 brokerages and two foreign portfolio investors (FPIs) to see if they provided indirect benefits to some board members of the National Stock Exchanges (NSE) in exchange for sensitive information as part of the co-location case.

I-T officials suspect that these entities used tax havens to purchase assets, fund holidays and invest in some of the businesses of the families of these board members, said people with knowledge of the matter. Those being investigated include Infotech Financials Pvt Ltd (IFPL), which had obtained trading data from NSE for computing the Liquidity Index.

Sunita Thomas, wife of Suprabhat Lala, a senior NSE official, was one of the directors of Infotech Financials. Thomas was also sister-in-law of another NSE official Ajay Shah, a market economist who was instrumental in giving the contract to IFPL, which he later allegedly used for commercial benefit, according to the first report of the Securities and Exchange Board of India (Sebi) into the co-location matter. A recent Sebi report on the case has reignited interest in the 2010-14 matter and led the questioning of several former NSE officials and the recent arrest of one of them. Ajay Shah and Suprabhat Lala didn’t respond to queries.

Tax officials are examining the foreign travel data of those named in the NSE co-location case for links to these brokerages and FPLs. S-ET

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