The Securities and Exchange Board of India (SEBI) has extended its investigation of ‘price-sensitive information’ leak on WhatsApp groups to 40 listed companies, The Hindu reports. The publication names companies like Jubilant Life Sciences, Coal India, Glenmark Pharmaceuticals, Century Textiles Industries, CESC, Cipla, LIC Housing Finance, Yes Bank, Zee Media Corporation, Maruti Suzuki India, JSW Steel, and Sun Pharmaceutical Industries which are being probed by SEBI for the violation.
In November 2017, SEBI had launched a probe on the trading data after it was revealed that financial results were circulated in social media groups before exchanges were informed. Many of the WhatsApp groups’ postings were termed ‘heard on the street (HOS). In this matter, the market regulator is investigating individuals like analysts, brokers, investment advisors and company officials for sharing unpublished price sensitive information (UPSI) –an information shared before disclosing the same to stock exchanges– a violation of regulator’s rule.
Guidelines and Implications
According to the Indian law, the dissemination of price-sensitive information will attract a fine of Rs 25 crore and can be higher if the information was used to make a trade, or a jail term of up to 10 years.
Also, SEBI has tightened the rules in 2015 on price sensitive information and said that unpublished information on financial results, dividends, and change in capital structure, among others, could lead to insider trading. It also added that it is not necessary for an individual to be in the company for insider trading.
Also, SEBI said had that it would clamp down on fraudulent and unsolicited investment tips and offers made through SMSes, Whatsapp, and other social media platforms and said it would coordinate with the Reserve Bank of India (RBI) and the Telecom Regulatory Authority of India (TRAI).
The regulator also released a consultation paper with the objective of specifying “uniform standards across all the intermediaries/persons engaged in providing investment advisory services irrespective of whether such activity is incidental to their primary activity or not and to address the gaps or overlaps in legal or regulatory standards.” More here.