Mumbai: The Securities and Exchange Board of India (Sebi) on Tuesday directed Tata Motors Ltd to conduct an internal probe into an alleged leak of certain sensitive data revealing the auto maker’s financial results through the popular instant messaging application WhatsApp, ahead of their formal release.
The market regulator ordered the company to strengthen its existing processes and controls to prevent any leakage of unpublished price sensitive information or (UPSI) in future so that no entity is able to take undue advantage of the privileged information and trade in the company’s shares to make unfair market gains, breaching Sebi’s insider trading norms.
Any leak or misuse of a listed firm’s information by any entity, before the company’s official announcement on exchanges, and trading on the basis of this information amounts to insider trading, considered a serious violation of securities market laws. If any entity is found to be trading in a listed company’s shares on the basis of privileged information (which is not published on the stock exchange) to make gains, Sebi is authorized to take serious action against such an entity.
Sebi ordered Tata Motors to submit a report on the present systems, the details of the entities responsible for monitoring such systems and the periodicity of such monitoring within three months.
Following its initial probe, Sebi found that for the financial year 2016, while the actual December quarter results of Tata Motors were announced to exchanges at 1516 hours on 11 February 2016, key financial figures were already in circulation among certain WhatsApp groups since 1229 hours on the same day.
“..the messages circulated in WhatsApp matched with the quarterly financial results of the company for 31 December, 2015, which were published subsequently," said the Sebi order.
Replying to an email from Mint, a spokesperson from the company said, “Tata Motors would like to state that it is fully committed to ensuring confidentiality of such price sensitive information. This lapse pertains to an incident in 2015. While the company has robust policies and processes to manage such price sensitive information, we will investigate this lapse thoroughly to identify and address process gaps and fix accountability."
This is the third Sebi order on cases relating to leak of sensitive financial information leaked on WhatsApp. Sebi has passed similar orders against Axis Bank Ltd and HDFC Bank Ltd on 28 December and 23 February respectively.
The Sebi probe into Tata Motors revealed that while WhatsApp messages by some private groups had showed their users the company’s quarterly turnover as Rs72,256 crore, the subsequent official announcement stated this figure at Rs72,256.40 crore. Similarly, the leaked numbers showed the company’s margins to be at 14.20% for the quarter against the actual figure of 14.17%. The company’s net profit too was leaked on WhatsApp, the Sebi probe found.
Sebi has also asked Tata Motors to find out the role of the members of its various committees involved in generation of the original data for the purpose of determination of key figures pertaining to financial figures.
In its reply to a show cause notice by Sebi, Tata Motors said the work relating to preparation of financial results for the quarter ended December 2015 had started on 15 January, 2016. The financials were then shared with the statutory auditors. Subsequently, the investor relations department received the company’s financial results from the accounts team and then the financials were presented in the audit committee meeting held on 9 February, 2016. Finally, the results were officially declared on 11 February, 2016 at 1516 hours, Tata motors said.
Sebi was not able to ascertain the source of the leak.
“Such leakage is prima facie attributable to the inadequacy of the processes controls systems that Tata Motors as a listed company had put in place," read the Sebi order.
Arushi Kotecha contributed to this story.