Sebi set to take action against senior staff over WhatsApp leak
Markets regulator Securities and Exchange Board of India (Sebi) will soon take action against some market operators and senior staff members of about a dozen listed bluechip firms, for their alleged involvement in the leak of price-sensitive information through WhatsApp.
The companies may also face censure action by the market watchdog for alleged lapses in safeguard mechanism to check the leak of unpublished price sensitive information (UPSI), including financial results before they were made public for all investors, said regulatory sources.
The regulator is close to completing its probe into the matter, including for suspected unlawful gains through insider trading on the basis of leaked information, and is collating the details it had sought from concerned firms, the officials said.
Almost all the companies have replied to Sebi’s queries in this regard.
According to top officials, the regulator is taking a tough stand on the companies that fail to fix individual responsibility for any leak of price-sensitive information.
Besides, the market operators - including staff members of some brokerage firms - are also under scanner for colluding with the company executives in the case, which came to light late last year.
Among various companies from which Sebi had sought details through its interim orders, HDFC Bank last week disclosed in a regulatory filing that it has submitted the requisite information to the regulator.
Referring to Sebi's February 23 directions, HDFC Bank said: “In this regard, and keeping with its commitment to the highest standards of corporate governance and the integrity of its systems, controls and processes, the Bank has submitted the requisite information and reports to Sebi in compliance with the Sebi directions and within the timelines prescribed therein.”
Sebi had asked the bank to conduct internal investigations to identify those guilty of the leak and take steps to check any recurrence, and also provide necessary information to the regulator within three months.
Apart from HDFC Bank, the regulator has already passed preliminary orders against Tata Motors, Axis Bank and Bata India in this highprofile case, wherein they were asked to conduct internal probes and report back to the regulator. The probe concerns about a dozen listed firms.
Soon after the preliminary orders were passed by Sebi, the four companies had said that they would comply with the directions from the markets regulator.
The preliminary probe by Sebi found that the companies’ quarterly financial results were matching with the figures that were in circulation on WhatsApp groups prior to the official announcement of results.
Sebi began a probe in November 2017 after a media report surfaced with respect to circulation of unpublished price sensitive information in various private WhatsApp groups about certain companies before their official announcements.
Companies may face censure for alleged lapses in safeguard mechanism to check the leak of unpublished price-sensitive information