NSE, BSE write to 12 companies whose earnings were leaked on WhatsApp

Both the regulator and the exchanges are trying to find out if leaking of such information on social media platform violates insider trading and listing regulations, sources told the paper.

“The exchanges have observed discrepancies in trade data, prompting bourses to seek clarification from the companies on the data leaks. We are examining the trade data of these companies for the past 12 months,” an official at a stock exchange said on the condition of anonymity.

SEBI, NSE and BSE did not respond to an email query regarding the same.

“In addition, in a communication sent to the exchanges last week, the regulator has also asked BSE and NSE to beef up their surveillance of other social media such as Facebook, LinkedIn and whether these platforms are being used to leak price-sensitive information,” said another source aware of the matter.

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Possession and circulation of unpublished price-sensitive information violate regulations preventing insider trading, which state that price-sensitive information needs to be uniformly disclosed through stock exchange platforms.

“The term ‘insider’ is very widely defined under the regulations to even include persons who are in possession of any form of Unpublished Price Sensitive Information or UPSI. The manner in which a person gets to know about such information is immaterial, even though it is unintended. Once insider, any communication even sans the trading will still lead to a violation,” said Tejesh Chitlangi, partner at law firm IC Universal Legal.

“With respect to leakage of such information on social networking platforms, the important question still remains that whether such information can be construed to be 'generally available' or not. If generally available to the public, then the subsequent communicators/traders cannot be termed as insiders,” Chitangi said.

Pinning down the insider and proving that the information being circulated is UPSI will be another set of challenges for the regulator and the exchanges.

“While the regulator and exchanges are trying to stem circulation of price-sensitive information, it would be a tall task to pinpoint an insider and prove that the information being circulated is UPSI,” another source told the paper.

SEBI is also considering seeking call data records of the persons involved. In addition, the regulator is taking the help of data warehouse and its intelligence systems.

BSE and NSE have already implemented social media analytics using artificial intelligence to track rumours and news reports on various web platforms including Twitter and Facebook about listed companies and their impact on stock prices.