SEBI Summons Suspects Who Used WhatsApp for Illegal Insider Trading

As many as 40 publically listed companies recently came under the radar of the securities market regulator, SEBI, for circulating unpublished price-sensitive information (UPSI) via WhatsApp groups. Thereupon, the regulator initiated a crackdown on suspects and impounded personal and official mobile phones and laptops during raids conducted beyond Delhi, Mumbai, and Bengaluru.

Equally the probe moves forward, SEBI has summoned and is now interrogating brokers and stock trading analysts whose devices were confiscated during the raids. This is in order to seek an explanation about the leaked information with the ultimate goal of finding the major violators who defaulted on insider trading norms and circulated the financial information before it was submitted officially.

The probe began on December 22 when SEBI identified and raided several stockbrokers and market analysts who had circulated confidential information including toll forecast, balance sheet results, plausible future deals, approvals from regulators acquired by more 35 companies, later increased to forty. This data was leaked much earlier the official figures were announced by the companies.

After confirming that terminal results of many companies were "either identical or matched closely with the [forecast] figures", SEBI has ordered companies to acquit internal audits to find the wrongdoers within the organizations. These companies include many blue-fries like Axis Bank, Tata Steel, Bajaj Finance, Wipro, Crompton Greaves Consumer Electricals, Cipla and many more.

SEBI Summons Suspects Who Used WhatsApp for Illegal Insider Trading

SEBI wishes current of air the example up earlier the next fiscal'due south beginning. Only since the regulator does not have any surveillance powers, information technology cannot intercept encrypted conversations on WhatsApp and the interrogation process is limited to statement-recording and manual queries. It would, all the same, be a very challenging job for SEBI to place the leaking sources and the "modus operandi", remarked legal experts aware of the procedure.

Furthermore, WhatsApp'southward wide reach makes identification of all the individuals who used the data a very difficult premise. So is determining which individuals took financial benefits from the leaks and whether the data was "meaningful, speculative, or covered under freedom of speech and expression," points out legal advisor Sumit Agrawal.