On Monday, charges of insider trading were dropped by market regulator SEBI against 11 individuals who were accused of sending WhatsApp messages with price-sensitive information about Axis Bank’s financial results that had not been published.
According to SEBI’s order, the parties in question 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.
The case involving the alleged dissemination of unpublished price-sensitive information (UPSI) regarding the financial results of half a dozen businesses, including TCS and UltraTech Cement, was settled by SEBI last year.
The orders came after the Securities Appellate Tribunal (SAT) had overturned SEBI’s charges of insider trading against some people in the WhatsApp leak case in March 2021, which the Supreme Court upheld on September 26 of that same year.
The case involves the dissemination of UPSI in various private WhatsApp groups in advance of certain companies’ official announcements of their results to stock exchanges, including Axis Bank.
In order to determine whether or not Axis Bank’s UPSI had violated PIT (Prohibition of Insider Trading) regulations, the regulator conducted an investigation in June and July 2017.
The regulator discovered during the course of the investigation that while Axis Bank’s results for the quarter that ended in June 2017 were made public on stock exchanges, prior to that announcement, certain figures related to the results were shared on WhatsApp.
It was alleged that Malbari, Vakil, Motiwala, Khanna, and Dedhia had circulated Axis Bank results on WhatsApp and were being treated as “insiders.” Additionally, Kotak Capital, Hinglaj, Mehra, Bagrecha, Shah, and Saldanha had traded in the company’s scrip while it was in the UPSI’s possession, in violation of insider trading regulations.
In 2017, some news reports mentioned that UPSI was circulated in various private WhatsApp groups about particular businesses before their official results were announced.
In light of this, SEBI started a preliminary investigation into the matter, including the search and seizure of approximately 190 devices, records, and other items against 26 WhatsApp group members.
Examining WhatsApp chats extracted from the seized devices, it was discovered that the messages allegedly contained earnings data and other financial information for approximately 12 businesses.
