SEBI suffered a set-back in the infamous WhatsApp leaks case. The Supreme Court (SC) rejected SEBI’s appeal to penalise a senior employee of a Mumbai equity brokerage house for sharing stock-price sensitive data on WhatsApp on the grounds that the regulator went behind the secondary source of the leaked data and could not find the primary source of the message.

In 2017, SEBI searched 26 entities and investigated nearly 190 phones to check who all were forwarding results of companies before they were out in the public domain. Such data can move the stock price. The probe revealed that Neeraj Kumar Agarwal and Shruti Vora, then employees of Antique Stock Broking, had forwarded the messages and penalised them.

The Securities and Appellate Tribunal (SAT) had quashed SEBI’s ₹15-lakh penalty against them, following which the regulator had approached the SC challenging the SAT order. The messages were related to Bajaj Auto — total income, EBITDA and PAT for the quarter ended March 2017 a few days before the results were due.

The SC Chief Justice UU Lalit said, “They are secondary chain. They have just forwarded the messages. It would mean upsetting everything and putting the burden again on them, which we are not willing to do… On the facts and circumstances of the case, we find no reason to entertain the appeal,” the CJI said. He also noted that the investigative machinery was not able to find the source of information.

SEBI’s adverse stand

Commenting on the order, Deepak Sanchety, the former chief market surveillance at SEBI, said, “SEBI is displaying extremely poor willingness to accept valid arguments of noticees and goes to Supreme Court. This is the reason that the success rate of SEBI in the Supreme Court has dwindled very fast. One would wish that some kind of accountability is brought in this area. An information can become UPSI only if at least one person at the two ends of communication was aware that it was UPSI. There are other cases as well where SEBI is not correcting its adverse stand, even after SAT orders in favour of the noticees.”

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