Market rumours: Sebi to crack down on intermediaries for circulating fake news on social media

The capital market regulator Securities and Exchange Board of India (Sebi) has issued a master circular on the surveillance of the securities market.

Among a number of things, the circular dated Sep 23 has given instructions around the monitoring of unauthenticated news circulated by the Sebi-registered market intermediaries through various modes of communication such as social media platforms.

The circular highlights that market rumours can do considerable damage to the normal functioning and behaviour of the market and distort the price discovery mechanisms.

Sebi has issued following instructions to market intermediaries:

1. Verification needed: Employees working in the offices of intermediaries will not encourage or circulate rumours or unverified information obtained from client, industry, any trade or any other sources without verification.

2. Maintain record: Logs for any usage of such social media platforms/ instant messaging services/ VoIP / Blogs/Chat forums/websites/e-mail or any such medium will be treated as records and the same should be maintained as specified by the respective regulations which govern the concerned intermediary.

3. Controlled supervision: Access to social media platforms/ instant messaging services/ VoIP / Blogs/Chat/ forums/ websites/e-mail or any such medium should either be subject to controlled supervision or access should not be allowed.

4. After approval: Employees should be directed that any market related news received by them either in their official mail/personal mail/blog or in any other manner, should be forwarded only after the same has been seen and approved by the Compliance Officer of the concerned Intermediaries.

5. Liable for action: If an employee fails to act as per instructions given in (4), he/she will be deemed to have violated the various provisions contained in SEBI Act and the Rules / Regulations framed thereunder, and will be liable for action.

Compliance Officer shall also be held liable for breach of duty in this regard

The other instructions enshrined in the master circular relate to the trading rules and shareholding in demat mode, disclosure reporting under the Sebi (prohibition of insider trading) Regulations 2015.