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Business News/ News / India/  Sebi dismisses insider trading charges against 11 entities in WhatsApp leak case
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Sebi dismisses insider trading charges against 11 entities in WhatsApp leak case

11 organisations in the WhatsApp leak case had their insider trading charges dismissed by Sebi on Monday.

The market regulator Sebi on Monday abandoned insider trading allegations against 11 organisations for allegedly using WhatsApp to disseminate confidential information regarding Axis Bank's financial performance. (REUTERS)Premium
The market regulator Sebi on Monday abandoned insider trading allegations against 11 organisations for allegedly using WhatsApp to disseminate confidential information regarding Axis Bank's financial performance. (REUTERS)

The market regulator Sebi on Monday abandoned insider trading allegations against 11 organisations for allegedly using WhatsApp to disseminate confidential information regarding Axis Bank's financial performance.

The entities are -- Amish Arvind Malbari, Arvind Malbari, Amrish Suresh Vakil, Fanil Motiwalla, Kunaal Raman Khanna, Gaurav Girish Dedhia, Kotak Capital Partners, Hinglaj Enterprise, Nidhi Mehra, BharatKumar V Bagrecha, Mita Mahendra Shah and Roshan Vivian Saldanha, Sebi said in its order.

In the case involving the alleged distribution of unreleased price-sensitive information (UPSI) concerning the financial performance of a dozen businesses, including TCS and UltraTech Cement, Sebi resolved the adjudication procedures against two individuals last year. The rulings followed the Securities Appellate Tribunal's (SAT) March 2021 dismissal of Sebi's insider trading charges against particular individuals in the WhatsApp leak case, which was subsequently affirmed on September 26 by the Supreme Court.

Prior to several firms' legitimate result announcements to the stock exchanges, including Axis Bank, UPSI concerning such companies was being circulated in numerous unofficial WhatsApp groups. The regulator then conducted an inquiry into the dissemination of UPSI by Axis Bank to see whether PIT (Prohibition of Insider Trading) rules had been breached between June and July 2017. Axis Bank's results for the quarter that ended in June 2017 were released on exchanges by the private lender, but some figures pertaining to the results were leaked on WhatsApp prior to the announcement, the regulator noticed during the examination. Malbari, Vakil, Motiwala, Khanna, and Dedhia were accused of sharing Axis Bank results on WhatsApp and being treated as "insiders," while Kotak Capital, Hinglaj, Mehra, Bagrecha, Shah, and Saldanha were accused of trading in the company's stock while in the UPSI's ownership and breaking the rules against insider trading. Sebi dismissed the 11 entities' insider trading claims in its order.

"I find that the allegations levelled against the entities in the present matter do not sustain. Consequently, the charge of violating PIT norms levelled against the entities Malbari, Vakil, Motiwalla, Khanna and Dedhia being insiders, having communicated the UPSI to Kotak Capital, Hinglaj, Mehra, Bagrecha, Shah and Saldanha who in turn is alleged to have traded in the shares of the firm while in possession of UPSI is also liable to be dropped," Sebi's Adjudicating Officer Sahil Malik said.

The leaking of UPSI regarding specific corporations in various private WhatsApp groups before their official result announcements was mentioned in numerous news publications from 2017 in this regard. In light of this, Sebi launched an initial investigation into the case, leading to the search and seizure of around 190 devices and data as well as actions against 26 participants of a WhatsApp group. Examining the WhatsApp conversations that were taken from the confiscated devices, it was discovered that the conversations had exposed financial and earnings information for about 12 different organisations.

(With inputs from PTI)

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Published: 02 Jan 2023, 10:54 PM IST
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