WhatsApp leak case: SEBI asks Axis Bank to conduct internal inquiry

| Updated on: Dec 27, 2017
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Axis Bank has come under the SEBI scanner for leakage of price sensitive information (PSI). On Wednesday, the capital market regulator asked the bank to conduct an internal inquiry to find out how financial results for the past quarter were leaked on WhatsApp chat groups ahead of their official announcement.

SEBI has set a three-month deadline for Axis Bank to finish its inquiry on all those involved in the process of making and disseminating the financial results. Axis Bank is the first casualty among dozens of companies that SEBI is investigating for leakage of PSI via WhatsApp.

The order passed by SEBI whole-time member G Mahalingam said the message in circulation on a WhatsApp Group was with regard to financial results of Axis Bank for quarter ended June 30, 2017. “The actual results of Axis Bank were announced to the stock exchanges on July 25, 2017 at 16:23 hours. WhatsApp message which gave a very close picture of the results was in circulation on July 25, 2017 since 9:12 AM. It was observed that the figures in circulation on WhatsApp about Axis Bank were either matching in totality or were close to the actual announcements except figures for slippages,” the order said.

SEBI said this could not have been possible without leakage of information from persons who were privy to the information. Figures pertaining to gross non-performing assets (NPA), net NPA, net interest margin, write-off by the bank in the particular quarter and current account/saving account per cent were accurately predicted by the WhatsApp message. But figures with regard to “slippages” (bad loans) were different from what was circulated on WhatsApp. Yet, the WhatsApp prediction that slippages could be mainly from outside the “watch list” matched with the actual results.

SEBI also asked Axis Bank to submit information about the controls it followed for handling unpublished PSI. The order said Axis Bank has informed the regulator that “it has ensured adherence to applicable laws and has adopted adequate processes/ controls to maintain confidentiality of price sensitive information relating to the Bank.”

Axis Bank also submitted that access or communication of such information, is made/done on a need-to-know basis. “Axis Bank also provided the chronology of events relating to preparation and finalisation of its financials (for the quarter)... It was submitted that the process for generation of data started from July 1, 2017 and the financial results were formally disclosed on July 25, 2017.”

Published on January 09, 2018

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