Mumbai: Sending out a stern warning to firms leaking key financial info ahead of public announcements on social media platforms, market regulator Sebi on Thursday said all those responsible, including auditors, will face the music and insider trading rules will be strengthened if required.
Addressing a press conference after a board meeting, Sebi chairman Ajay Tyagi said it's clear from the instances involving recent information leaks on WhatsApp that the details were leaked by companies themselves.
He also said Sebi has set up a committee to discuss various issues of insider-trading and to figure out how much more regulatory strengthening is required. "We will bring out amendments to insider trading regulations soon."
Blaming companies themselves for the problem, he said, "we cannot hide behind technology and say this is encrypted it's our role to see that price-sensitive information should not be out before it is in the public domain."
He also warned that Sebi is also separately probing the data leakage to get to the bottom of the issue.
The announcement comes a just day after Sebi asked Axis Bank to strengthen its systems and conduct an internal probe to fix responsibility as the initial probe showed leakage due to "inadequacy" of the bank's processes, Tyagi said, adding there are more companies and necessary actions would follow on all of them.
Pointing out that the whole market depends on trust, he said as the regulator Sebi just cannot let it happen again.
"When the whole system depends on the trust, when capital markets are booming and people are investing in the markets if select people have access to results before it is in the public domain, it is just not on," the chairman said.
Sending out a stern warning to all concerned, Tyagi said, "we're looking into it from all aspects: whatever technological improvement is required, whatever system improvement is needed, whatever legal and enforcement actions are required, we will do."
Without naming any company, Tyagi said, "one thing is clear that some information has been leaked and our analysis has established that it has been leaked by the original company itself. Whether this was done via their own mechanisms or other fiduciaries like auditors are involved, is what is to be established now."
Stating that Sebi is sure about the source of leaked info - the company itself - he said even without going into technological challenges, basic thing remains the same that the origin has to be from the company.
"So it is the responsibility of the company concerned to see who's handling what kind of information internally, and make sure that this does not re-occur and put proper system in place," Tyagi said.
To a question whether auditors are also insiders and privy to such information before they're made public, he said they'd also face action if found guilty.
Yesterday Sebi asked Axis Bank to complete an inquiry within three months and file a report to Sebi within seven days thereafter.
The move, a first, came after the Sebi had found that its June quarter result was "either identical or matched closely with the figures" that were in circulation on WhatsApp prior to the official announcement.
Sebi began a probe last month after a media report that there had been information in circulation on various WhatsApp groups about some companies, including Axis Bank, ahead of their financial results.
The Sebi also conducted search and seizure operations at various places, including on the premises of various market entities. The directive to Axis Bank is the first order from Sebi in this case and several others may follow soon.
During the preliminary probe, its' been observed that the WhatsApp messages almost matched the quarterly number of Axis Bank, which were published subsequently. While the official numbers came in on July 25 at 1623 hrs, the WhattsApp message was in circulation since 0912 hrs on the same day.
Late last night, Axis Bank said it would work with Sebi with regard to the leakage of unpublished price sensitive information and take appropriate action.