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SEBI penalizes individual for releasing price sensitive information: WhatsApp Leak Case

SEBI penalizes individual for releasing price sensitive information: WhatsApp Leak Case
On Monday (June 15, 2020), market regulator SEBI penalized an individual after he was found guilty of releasing unpublished price sensitive information related to financial results of Asian Paints through WhatsApp messages before the official announcement by the company.

A penalty of ₹ 15 lakh has been imposed on the said individual - Neeraj Kumar Agarwal.

A few news reports referred to the circulation of Unpublished Price Sensitive Information (UPSI) in various private WhatsApp groups about some companies before their official announcements to the respective stock exchanges.

Regarding this, SEBI had initiated a preliminary examination during which search and seizure operation against 26 entities of a WhatsApp group were conducted, and around 190 devices and records, among others, were seized.

The chats extracted from seized devices were examined further and it was found that earning data and other financial details of about 12 companies were leaked through WhatsApp.

Asian Paints was one of the firms whose quarterly financial reports closely matched with the messages in the WhatsApp chats. 

An investigation was carried out regarding the matter of circulation of UPSI through WhatsApp messages related to Asian Paints to ascertain any possible violation of the PIT (Prohibition of Insider Trading) Regulations in March-May 2017.

In the probe conducted by SEBI, it was found that Agarwal communicated the UPSI related to total income, EBITDA, and profit after tax of Asian Paints for the quarter ending March 2017 through WhatsApp messages.

The financial figures of Asian Paints that were circulated through WhatsApp closely matched with those subsequently revealed to the exchanges by the company.

SEBI in its 36-page order said, “The noticee (Agarwal), being an insider, had communicated the UPSI relating to Asian Paints Ltd, to another person through WhatsApp messages, which is in violation of the provisions of SEBI (PIT) Regulations, 2015, for which the noticee is liable for monetary penalty.”

Any person having possession of UPSI is regarded as an insider, according to the PIT norms.

Shruti Vora, who had been working in the institutional team at Antique Stock Broking Ltd from September 2008, was also penalized by SEBI for releasing UPSI related to financial results of Asian Paints through WhatsApp messages.

Earlier, persons involved in communicating financial results of Bajaj Auto, Ambuja Cement, Wipro, and Mindtree through WhatsApp messages before their official announcements had also been penalized by the regulator.


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