Mumbai, March 19, 2018

Companies may have to change how they handle price-sensitive information.

The markets regulator is weighing tighter oversight to check leakage of privileged company information in the wake of unpublished financial results finding their way into WhatsApp groups, two people aware of the development said.

Officials at the Securities and Exchange Board of India (Sebi) have suggested that companies frame a policy on how to handle unpublished price-sensitive information, or UPSI, and convey the policy to employees; monitor big share price changes before important events like earnings releases; conduct background checks on employees dealing with such information; identify people involved in major deals and ensure information given to junior or external teams is on a need-to-know basis; and create separate work spaces with secured access for those preparing and discussing issues that are price-sensitive.

“These measures have been suggested by Sebi officials who are part of a panel on “fair market conduct”. The panel has four subcommittees and is expected to submit a report next month to the regulator, said the first of the two officials cited earlier. Sebi formed the committee, led by former law secretary T K Viswanathan on, August 1, 2017 to review its rules on insider trading and unfair trading practices.

Sebi did not respond to an email seeking comment sent on Friday.

Yet, the regulator is still considering the possibility that the leaks could be a systemic issue, not a company-specific one.

“Close to 24 companies are under probe and in the four companies where the regulator has passed orders, the facts and circumstances are same that the leaked information mirrored the results. So, there is an assessment that it could be a systemic issue,” said the first person. This does not mean these companies will be let off the hook, he added.

[The Hindustan Times]