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WhatsApp case: Sebi imposes Rs 15 lakh fine on person for leaking price sensitive info


New Delhi:  Capital markets regulator Sebi has levied Rs 15 lakh fine on an individual for circulating unpublished price sensitive information pertaining to Bata India Ltd's financial results through WhatsApp messages prior to the official announcement.

A fine of Rs 15 lakh was imposed on Aditya Omprakash Gaggar for leaking price sensitive information, Securities and Exchange Board of India (Sebi) said in an order.

Sebi conducted an investigation between January 2016 and February 2016 in the matter of circulation of unpublished price sensitive information (UPSI) through WhatsApp messages with respect to Bata.

The probe found that Gaggar, among others, communicated the UPSI related to Bata pertaining to sales, profit after tax and EBITDA for the quarter ended December 2015 through WhatsApp messages.

While the investigation has not revealed any material directing to the source of the UPSI, Sebi said the "significant fact is that the content of the message that was communicated between the Noticee exactly matched with that of the financial results of Bata Ltd announced later on the same day." Noticee refers to Aditya Omprakash Gaggar.

The disclosure of this information violates the rule of parity of information and perpetuated information asymmetry, Sebi said in its order passed on Tuesday.

Sebi noted that developments in technology, information flow and access to markets have enabled new market structures to evolve and impact the way in which market manipulation occurs.

"The instant case before me is one such example where the information constituting UPSI has been circulated through WhatsApp messages, which conveniently wipes out any trace of the insider leaking the UPSI when the messages are deleted and manages to reach the selected group of targets," noted BJ Dilip, adjudicating officer, in the order.

Certain news reports had referred to the circulation of UPSI in various private WhatsApp groups about certain companies, ahead of their official announcements to the respective stock exchanges.

Against this backdrop, Sebi had initiated a preliminary examination in the matter, during which search and seizure operation for 26 entities for WhatsApp groups were conducted, and about 190 devices, records, among others, were seized.

WhatsApp chats extracted from the seized devices were examined further and while examining the chats, it was found that earnings data and other financial information of around 12 companies were leaked through WhatsApp messages.

Bata was among the companies whose quarterly financial result was leaked.

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