The Securities and Exchange Board of India (Sebi) is “seriously” looking into the complaints about some market insiders allegedly circulating key financial details and other price-sensitive, market moving information about listed companies on social media groups such as WhatsApp before they are made officially public.
Sebi chairman Ajay Tyagi on Tuesday said it has come to know of instances wherein price-sensitive financial data of reputed companies were leaked right before the earnings were formally made public. “We are taking that very seriously. How come such messages about reputed listed companies are leaked quite close to the financial results…(It) is something we are not going to sit quietly on,” Tyagi said on the sidelines of an investment banking summit here.
The markets regulator and the exchanges are examining trade details of over two dozen stocks as part of a probe into the alleged leak of key financial details through social media platform WhatsApp. Sebi had reportedly summoned chief financial officers and company secretaries of at least 12 firms over the issue of whether prescient social media messages involving them were being circulated. However, Sebi chairman refused to confirm summoning of company officials.
Sebi is also considering seeking call data records (CDRs) of all the persons involved in the circulating such key financial details and other price-sensitive information about publicly traded companies on social media groups before they are made public.
Meanwhile, Sebi is planning to make the initial public offering (IPO) process easier and faster by simplifying the entire procedures with a focus on reducing the listing time to four days from six now. It has already reduced the listing time from the seven days in the past to six days after the close of the bidding.
Earlier, the regulator had ended the practice of allowing the issuer to block the entire subscription amount in demat accounts by allowing the money to be blocked in the investor’s account through the Absa facility. This helped not blocking the investor’s money in a third-party account till the IPO process was over.
Tyagi said that “the amount of funds raised through the primary issues this year is more than six years combined”. He said formalisation of the economy after the note-ban, softer interest rate regime as well increasing public awareness about mutual funds (MFs) have boosted demand side, while good issues have helped the supply side.
Underlining the need for stable regulations, Tyagi said as a regulator, he wants to maintain a balance in regulations because any overburden will lead to lower investments from coming in to the economy. Of the 86 IPO prospectus issues filed, Sebi has given final comments on 66 and 20 are pending. On the role of investment bankers in the success of IPOs and in raising retail participation, he said “advisors should convince or advice issuers about the right pricing” so that there is something on the table of the investor as well. Tyagi said Sebi has created a division to focus on MFs and working with fund houses so that there is no mis-selling.
He further said the Sebi board will not take up the Uday Kotak report on corporate governance for discussion in its meeting later this month. The Kotak committee, which was constituted by Sebi, had suggested a major overhaul of corporate governance norms for listed companies in its report submitted on October 5. “We are not going to take up the Kotak report in the next board meeting,” he said. Earlier, addressing the summit, he had noted that Sebi had received a large number of comments on the report. “We are examining them and will see about how to go about implementing them,” the Sebi chief said.
Tyagi said Sebi is looking to resolve the NSE co-location matter “as quickly as possible. We are examining various issues and an inquiry is going on.” With PTI