SEBI has directed all registered intermediaries to ensure that their employees do not encourage and circulate unauthenticated information (received from clients, industry, trade and other sources) through blogs, emails, chat forums and messenger sites on the Internet.

SEBI in a circular put out on its Web site on Wednesday, asked all intermediaries to put in place proper records and a code of conduct for employees. The order also encompasses temporary staff and voluntary workers on an intermediary's premises.

The circular comes into effect immediately.

The regulator took such a step after receiving complaints about unauthenticated news about various scrips being circulated in blogs, chat rooms, and through email by employees of brokers.

SEBI's directive states that access to such media will be disallowed for employees at the workplace unless done under proper supervision. Intermediaries have been asked to maintain a proper log of every usage of chat, blogs and messenger sites as specified by the respective regulations governing the concerned intermediary.

Employees who fail to take approval from their compliance officer before forwarding any such information, said the market regulator, are liable for prosecution.

“Employees should be directed that any market related news received by them either in their official mail/personal mail/blog or in any other manner, should be forwarded only after the same has been seen and approved by the concerned Intermediary's Compliance Officer. If an employee fails to do so, he/she shall be deemed to have violated the various provisions contained in SEBI Act/Rules/Regulations etc. and shall be liable for action. The Compliance Officer shall also be held liable for breach of duty in this regard,” the SEBI statement said.

The regulator also observed that intermediaries had not put in place checks and balances to govern the conduct of their employees.

Stock exchanges and depositories have been asked to amend their byelaws, disseminate the information on their Web sites and intimate all brokers and depository participants.

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