Sebi moves to curb sensitive information leak, seeks trading details

Individuals and entities circulating unpublished price sensitive information (UPSI) of listed firms over social media platforms have come under the regulator's glare. Sources said the Securities and Exchange Board of India (Sebi) had issued letters to over 50 individuals, including current and former employees of broking firms who had received and forwarded UPSI in the recent past. This includes information pertaining to financial results, guidance, and mergers and acquisitions. 

Sources said the market regulator had asked certain individuals to furnish details of the source of such information, along with their trade details. 

Sebi's investigation team, tasked with probing the violation of insider-trading norms, is independently examining the trading accounts of these people, said people in the know. 

The regulator is learnt to have come across several WhatsApp groups that were being created with the sole purpose of disseminating such UPSI, rumours, and alerts. The regulator has prepared a database from such groups and initiated a preliminary enquiry against them. 

"The regulator is examining how such leaked information was used to conduct transactions in the shares of the companies. The regulator suspects some of these groups could be hand in glove with the firms," said a source.

Sebi is in the process of collating bank details and call data records of several individuals and company executives, including some marquee names. Shares of companies that have witnessed an unusual spike in volatility and trading volumes are being monitored. 

"The regulator is planning a major crackdown on individuals possessing and spreading sensitive information with the intention of making illicit gains," said another source. 

Some individuals who have responded to Sebi said the circulation of speculation and rumours, pertaining to listed firms, was a common practice in the marketplace. 

"Most of the time, these numbers (especially earnings and guidance) are an average of estimates made by several brokerages," said a market participant, adding Sebi should go after individuals who leak authentic information to benefit from the stock price movement before the news hits the market. 

In the past, Sebi has directed a few listed companies to conduct internal investigations to identify those guilty of leaking UPSI. Most companies named by Sebi, however, have avoided fixing any individual responsibility and refused to accept the blame. 

Last year, Sebi launched a massive probe after reports surfaced that UPSI was being circulated in private WhatsApp groups about certain companies ahead of the official announcements.

The regulator also conducted search and seizure operations in this regard at various places, including on the premises of various market entities.

Sebi had even passed initial advisory against Tata Motors, Axis Bank, HDFC Bank, and Bata India. These companies were directed by the regulator to conduct internal probes and report to the regulator. 

The preliminary probe by Sebi found the firms' quarterly financial results were matching with the figures that were being circulated on WhatsApp groups prior to the official announcement.

Widening the net 

• Sebi investigation team is examining the exchange of sensitive info 
• Regulator issues letters to individuals dealing with UPSI 
• Sebi to ascertain the origin of the leaks
• Last year, Sebi issued directives to several companies whose financial numbers were leaked
• Sebi suspects company executives could be hand in glove with some sections of the market