SEBI probes illicit trades of ‘corporate espionage’ syndicate

PTI New Delhi | Updated on January 24, 2018 Published on February 22, 2015

Amid a major crackdown on the alleged leak of classified official documents at the behest of corporates, SEBI is looking into whether such leaks were used to push up or pull down the share prices of listed companies.

Depending on the progress of the inspection, which involves analysing trading and share price trends in a host of energy companies, including some large players from the private as well as the public sector, further action would be initiated by the regulator, a senior official said here.

Those found to have traded on the basis of stolen information from Government offices could be probed under insider trading as well as the prevention of fraudulent and unfair trade regulations and would be subjected to stern penal action by SEBI, he added.

Sources said suspected foul play in some of these stocks is already under investigation, which were launched after the stock exchanges and SEBI came across media reports concerning undisclosed developments about them while resulting in huge movements in their share prices.

Now it has come to light that those media reports were based on leaked documents.

Cracking down on a suspected case of corporate espionage, Delhi Police has arrested at least 12 persons, including two Ministry officials and some middlemen, in connection with the alleged leak of classified Government documents to private sector companies for money.

There have been reports that these leaked documents, that even included those related to the upcoming Union Budget, could also have been used for trading in the stock markets, although there is no official word on this.

When asked whether SEBI is looking into the matter, SEBI Chairman U K Sinha said on Friday on the sidelines of an event in Patalganga near Mumbai that he did not have any specific details on the issue, but if there was any truth in the allegations, the regulator would take stern action.

“We have an integrated surveillance department. If there is an iota of truth in that, my people would already be working on that,” Sinha had said without elaborating further.

Trades conducted on the basis of such confidential information, which would qualify as Unpublished Price Sensitive Information (UPSI), could amount to illegal insider trading as well as unfair and fraudulent activities.

There have been reports that the probe into the alleged leaking of confidential information could be expanded to other key economic ministries as well, while the leaked documents could also include those related to the Budget preparation.

Published on February 22, 2015
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