After WhatsApp refused to share user-specific information, in relation to multiple instances of HDFC Bank’s financial report leaks, the Securities and Exchange Board of India (SEBI) has directed Tata Motors to conduct an internal inquiry into leakage of its financial results through WhatsApp before its public announcement. The board has given three months’ time to the company to identify concerned officials/departments/ teams involved in the matter.
In its order, SEBI said it appears that the financial results of Tata Motors for quarter ended December 2015 were finalised on or before February 9, 2016, which was before circulation of WhatsApp message on February 11, 2016, and observed that the financial figures were matching with the figures that were in circulation prior to its official announcement. It added that such resemblance of the information circulated on WhatsApp with the actual financial results prima facie, and that the same could not have been possible without leakage of information from the person(s), who were privy to the information relating to financials prior to its official announcement.
In a response to SEBI’s order, Tata Motors said in a statement shared with the stock exchange, that it will investigate the matter. It said:
Tata Motors would like to state that it is fully committed to ensuring confidentiality of such price sensitive information. This incident pertains to the financial results for the quarter ending December 2015. While the company has robust policies and processes to manage such price sensitive information, we will investigate this incident thoroughly to identify and address process gaps and fix accountability.
The Matter
Earlier, the Securities and Exchange Board of India (SEBI) had directed HDFC Bank to strengthen its system to prevent leakages of price-sensitive information.
The developments are taking place after SEBI extended its investigation of such WhatsApp leaks to 40 companies, including 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.
SEBI had initially launched the probe in November 2017, 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.
The regulator reportedly seized laptops of 34 dealers and brokerage analysts, in an attempt to determine the origin of the leaks.
SEBI on insider trading
