Sebi cracks down on unauthenticated news circulation by intermediaries
The regulator told the intermediaries that the access to blogs, chat forums, messenger via which the unauthenticated news related to stocks was being circulated should be restricted under supervision
The Securities and Exchange Board of India on Tuesday directed market intermediaries to put internal code of conduct and controls in place to deal with the rise in circulation of unauthenticated news by Sebi-registered market intermediaries through various modes of communication.
This comes after the regulator said it has observed that a lot of unauthenticated news related to stocks through blogs/chats, emails, forums was being circulated by the employees of broking houses and other intermediaries. This is being done without any caution as mandated under the code of conduct of stock brokers and respective regulations of various intermediaries registered with Sebi.
The regulator told the intermediaries that the access to such blogs, chat forums, messenger should be restricted under supervision or access should not be allowed.
Any market-related news that workers receive via email, blogs, personal or official mail, or in any other way should be instructed to not be forwarded until it has been reviewed and approved by the compliance officer of the relevant intermediary.
If the employee doesn’t comply, he/she should be considered to have broken the Sebi Act’s numerous provisions and will consequently be subject to punishment. In this case, the compliance officer should also be held accountable for breach of duty violations, the circular said.
“Due to lack of proper internal controls and poor training of employees of such intermediaries are sometimes not aware of the damage which can be caused by circulation of unauthenticated news or rumours. It is a well-established fact that market rumours can do considerable damage to the normal functioning and behavior of the market and distort the price discovery mechanisms," Sebi said in the master circular.
The market regulator instructed the intermediaries that their temporary employees, volunteers, and other staff members should not promote or disseminate rumours or unreliable information collected from clients, businesses, trade, or other sources without proper validation.
Unlock a world of Benefits! From insightful newsletters to real-time stock tracking, breaking news and a personalized newsfeed – it's all here, just a click away! Login Now!