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Ajay Shah is being probed for possessing documents under the Official Secrets Act

Ajay Shah is being probed for possessing documents under the Official Secrets Act

Sources said that Ajay Shah, a former advisor to the Finance Ministry between 2004 and 2009 and the main accused in the NSE co-location scam, is under investigation for possessing sensitive documents under the Official Secrets Act (OSA). business Line, An internal assessment report of the Income Tax (IT) department said Shah was in the business of lobbying and secret government policy decision papers in his possession could have been used for dabbling in shares.

The IT report, which was prepared after raids, search and seizure operations on various entities and provided suggestions and guidelines to investigators, was submitted to the Central Bureau of Investigation (CBI) team probing the co-location scam.

The report said, “It is important to mention that several secret and privileged documents including cabinet notes etc. were also found from the digital data seized from Prof. Ajay Shah. He may be already aware of important policy decisions of the government, which could have an impact on stock prices as well. The documents include emails regarding lobbying for NSE, favorable policy changes, certain privilege communications between DGIT (Inv) Mumbai and member inquiry CBDT. Further, the possession of confidential documents relating to search and seizure operations by the IT Department is a violation of OSA 1923.

lobbying activities

Sources said this simply means that tax officials have found confidential government documents and even papers related to IT raids on others when Shah was raided. IT Evaluation Report, Viewed by business LineThe OSA presents relevant clauses of 1923 that may apply to the Shah for possession of confidential government documents.

The nearly 1,000-page IT report, which tells the CBI about the co-location scam and even the role of some big hawala operators and stock market manipulators, got more details about Shah’s lobbying activities. and said that he had fled. It is like a business.

Bypass NSE Server

The IT report said it had received more emails showing how senior NSE official Suprabhat Lala, Shah’s brother-in-law, Shah’s wife Susan Thomas and an associate Krishna Dagali and their companies were “involved in commercial software development and latency.” – Arbitration based for commercial purpose.”

Lala, who has held various senior positions in the NSE, is married to Shah’s sister-in-law Sunita Thomas and both are under investigation in the co-location scam. The IT report said that Dagli was accessing NSE in an unauthorized manner and Lala was well aware of this.

In a 2009 email, Dagli wrote to Lala, “I’m sorry I didn’t get your prior permission before logging in and using this ID because we were primarily logging in and not doing any trading activity.” I thought it would not be required. We did this to check whether CTCL is functioning normally in TAP environment. SEBI investigation revealed that Shah and his wife had done research on the pretext of research. Had collected data from NSE and even had authorized password access to NSE system.

TAP system manipulation

TAP is the first level of verification of messages before they enter the trading system and helps in managing the traffic on NSE servers. The IT report states that stockbroker OPG had manipulated the TAP system and managed to bypass it to connect to the NSE server and the NSE officials confirmed to the tax authorities that they had received complaints of TAP manipulation. Despite this, NSE did not conduct any “investigation or investigation or penalize the brokers who indulged in circumventing the TAP application or quantifying the illegal profits made by them,” the report says.

According to the report, Shah and his associates started receiving “tick-by-tick” (TBT) data from the NSE from 2006, four years before co-location trading began. The report mentions an email exchange between Dagli and Shah in 2006, when he was still an advisor to the finance ministry, in which the two were discussing how to use TBT data. TBT data can give advance information of the entire order book in the stock market on a real time basis. Markets regulator SEBI made it mandatory for NSE to share TBT data with all market participants only after 2017 or 2018, unless it was privileged information.

‘Shah’s Software’

“We have collected a fair amount of tick data over a period of nine months. The data includes spot and future prices, and overall MBP (market by price) information and timestamps, among other details, provided by NSE. We have also started logging in option prices from the last two months. Can you please suggest what kind of things we can do with these TBT data and R,” Dagli wrote in an email to Shah on February 28, 2006.

The IT report says that the “R” in this conversation is software that Shah was developing for algorithmic trading.

In another email on 1 June 2011, Dagli wrote to NSE official Lala, “I have a TBT line and I am able to process it faster than others. Can we do latency-based arb? Basically, if it’s allowed, I want to work on it so that we can build systems faster and at the same time use it as a product to sell strategy to people.

Shah did not respond to emails. Lala said he did not want to comment.

Published on

21 June 2022

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Ajay Shah is being probed for possessing documents under the Official Secrets Act

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