CBI probing NSE illegal phone tapping

The Central Bureau of Investigation (CBI) is investigating whether illegal phone taps of National Stock Exchange (NSE) employees involved omission or commission acts on the part of the Securities and Exchange Board of India and audit firm EY India. The inquiry had come to light during investigations into alleged irregularities related to the co-location facility at the bourse.

It is reported that NSE hired iSec Services for conducting periodic study of cyber vulnerabilities under a Rs 4.45-crore contract. However, the actual purpose was to snoop on employees to find out if they were passing on information about the co-location issues or discussing it among themselves.

The NSE failed to mandate the audit firm to carry out a thorough investigation into iSec Services and didn't inform the capital market regulator about the alleged illegal practices carried out at the bourse. Sebi and EY failed to investigate the contract awarded to iSec Services Pvt., which is said to have carried out the snooping, and didn't detect any illegal monitoring of phone lines between 2009 and 2017.

An official said, “The CBI during searches carried out earlier this week managed to not only find the transcripts but also a server and laptops used as a part of the surveillance mechanism. The snooping stopped in 2017 when the co-location scam broke out. In 2019, it disposed of the surveillance set up by iSec Services as e-waste, which amounts to destruction of evidence. The exchange will be quizzed on whose behest was the disposal ordered.”