WhatsApp leaks: Axis Bank gives its officials clean chit
Axis Bank has committed to increasing scrutiny of third parties with access to financial results
New Delhi: Axis Bank Ltd has ruled out any leakage of information from the bank in a report submitted to the markets regulator on the alleged leaks of price-sensitive information on WhatsApp groups ahead of its June quarter results last year, two people with direct knowledge of the matter said.
“The bank has submitted its report and relevant findings in the stipulated time. It has committed to further tightening the internal mechanisms while dealing with price sensitive information,” one of the two people mentioned above said on condition of anonymity.
On 27 December, the Securities and Exchange Board of India (Sebi) had asked Axis Bank to conduct an internal inquiry into the suspected leak of its June-quarter financial results on WhatsApp groups and pinpoint the source of unpublished price sensitive information (UPSI).
The deadline for submitting the probe report expired in the second week of April.
Financial figures pertaining to the quarterly results of Axis Bank were either identical or matched closely with those in circulation prior to the official announcement of the results, Sebi had said in the order.
The regulator has so far asked Axis Bank, HDFC Bank Ltd, Tata Motors Ltd and Bata India Ltd to conduct internal inquiries and strengthen their systems.
HDFC Bank’s report is due for submission in the first week of June.
“The bank has ruled out any inside leakages as none of the officials handling results were found to be violating the model code of conduct (norms which protect inside information). In the report, the bank has also committed to increasing its scrutiny of third parties such as statutory auditors who are typically provided with financial results before they are made public. It has also informed Sebi that it follows the highest compliance standards and has further tightened norms to treat price sensitive information,” said the second of the two people quoted above.
A spokesperson for Axis Bank declined to comment on an email query sent on Wednesday.
An email sent to capital markets regulator Sebi remained unanswered.
The development has made it hard for Sebi to proceed as it has failed to pinpoint the source of unpublished price sensitive information and as WhatsApp has declined to provide user information.
Business Standard on 1 March first reported that WhatsApp refused to share user specific information to aid the regulator in its probe.
“In such a circumstance, it will be up to Sebi to take the investigations forward, if needed. Sebi could go deeper if it finds the report by Axis Bank unsatisfactory. It could seek documents, information from Axis Bank, statutory auditors etc to complete fact finding,” said Tejesh Chitlangi, senior partner at IC Universal Legal.
Axis Bank also said in the report that it always resorted to preparing a list of unpublished price sensitive information and has now made it more exhaustive.
The bank will also consider a comprehensive audit, monitoring big price changes before important events like earnings announcements.
“Some of the other measures that the bank has highlighted to the regulator include—a separate dedicated work space with secured access for those preparing, discussing, finalizing unpublished price sensitive information has been created. Increased background checks for staff dealing with unpublished price sensitive information , identify persons involved in major deals and ensure information given to junior or external teams is on need to know basis,” said the second of the two persons aware of the issue quoted above.
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