Firms need to weed out the mole within

PALAK SHAH Mumbai | Updated on April 09, 2021

Qualified insiders are the ones privy to results

It is not very unusual for market regulator SEBI to see its orders getting dismissed by the Securities and Appellate Tribunal (SAT). Hence, SAT setting aside SEBI’s order in the infamous ‘WhatsApp leak’ case is a non-event for the regulator.

However, the case itself is a deeply concerning development for corporates like Asian Paints, Bajaj Auto, Ambuja Cement and others, whose nearly identical financial numbers were leaked ahead of official release.

In 2017, SEBI first found that quarterly results of Asian Paints were circulated on WhatsApp by an employee of Mumbai’s Antique Broking.

Tracking the source

The trail further led SEBI to a web of market analysts and traders in the ring. SEBI’s case collapsed in SAT as the judges relied on the argument that mere forwarding of WhatsApp messages involving unpublished price sensitive information (UPSI) cannot lead to the charge of insider trading, since those who were forwarding the messages were assumed to have no knowledge of UPSI.

Despite meticulously rummaging about 190 mobile devices, several WhatsApp groups and records, and conducting search and seizure operations against 26 entities, SEBI could not track down the ultimate source of the messages. Otherwise, the case could have turned sensational like the Rajat Gupta insider trading in the US.

The companies whose near identical results were circulating on WhatsApp before their official release, need to be alert. Leaking of results isn’t the job of an office boy. Highly qualified insiders who are involved in preparation of results and its communication to the outside world, are the only ones privy to it before the numbers are officially released. The companies need to weed-out the mole within. Otherwise, life goes on for SEBI.

Published on April 09, 2021

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