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Authored by Vignesh Kumar & Padma Akila

Date(s) of Order  29th May 2020, 4th June 2020, 15th June 2020 & 16th June 2020
Purported contravention committed Leak of Unpublished Price Sensitive Information (“UPSI”) through electronic medium viz; WhatsApp.
Persons charged and who are they Individuals employed in stock broking companies viz; Ms. Shruti Vishal Vora, Mr. Aditya Omprakash Gaggar, Mr. Neeraj Kumar Agarwal & Mr. Parthiv Dalal (“Noticees”)
Companies whose information were being circulated Bata India Limited, Asian Paints Limited, Mindtree Limited & Wipro Limited (“the Companies”).


1. On November 17, 2017, a news article was published in a newspaper which reported that UPSI pertaining to the financial results of some major companies were circulated through electronic medium viz. WhatsApp, prior to the disclosure of financial results to the stock exchanges by the Companies.

2. Consequent to the news article becoming public and raising concern among the investors, the Securities Exchange Board of India (hereinafter referred to as “SEBI”) conducted search and seizure operations, during which several mobile phones and devices were seized from members of the private WhatsApp group viz; “Market Chatter” in which the Noticees were members.,

3. Although SEBI had been unable to trace the original source of UPSI, upon the scrutiny of the WhatsApp chats from the devices seized, it was SEBI’s allegation that financial information (that were near accurate to that of the subsequently published results, with the variance as per SEBI being very minimal) of certain companies were received by the Noticees, and circulated in the said WhatsApp group prior to disclosure by such companies to the stock exchange, and also forwarded by them to various other individuals who were not connected directly with the Noticees and the Companies.


1. The information circulated through WhatsApp does not qualify to be UPSI, as there is no connection between them and the Companies or its promoters/management. SEBI has accepted the submissions of the Companies, its promoters, directors, employees and auditors who had access to the financial results that they haven’t leaked the information in the financial results to anyone. Hence, the Noticees cannot be construed to be Insiders.

2. The Noticees had circulated the information to other individuals based on the estimates projected by stock broking companies which is available in the public domain and thus the circulated information fails to be qualified as UPSI. Also, the information cannot be UPSI in the absence of any connection between the Company and the person who shared the information.

3. SEBI regulations prohibit communicating UPSI. By the very definition, it is imperative to understand that the said section prohibits only sharing of information and not mere market gossip or speculation. The messages shared through WhatsApp are merely Heard on Street (“HOS”) and not UPSI.

4. SEBI has cherry picked the HOS that closely matched, and has ignored those that have been preposterously incorrect, and post facto analysis of after declaration of results is useless.

5. The Noticees are employed in stock broking companies. It is a part of their work profile to communicate the market expectations, price movements and speculative information based on certain parameters to their clients for making informed decisions.

6. Neither the Noticees nor their family members had traded in the shares of any of the Companies.


1. The leaked information, was the same as the announcements subsequently made by the companies to the stock exchanges, and the inability to trace the source of the leaked information within the companies is irrelevant in the determination of such information being UPSI or otherwise.

2. There was no evidence implying that the information circulated was based on market research which was in turn based on generally available information, and that such market research was accessible to the public on a non-discriminatory basis and hence concluded that the leaked information qualified to be UPSI.

3. Although the Noticees were financially literate and associated with the securities market, who were reasonably expected to be aware of the nature of information shared on the electronic medium, continued to be an instrument in the chain of circulation of PSI and did not  report the leak of information to SEBI but instead they accepted such PSI and thereafter passed it on to other unconnected individuals to the Companies.

4. The information in this case was not generally available in a public domain but was being circulated in a closed group which would lead to discriminatory access and thus cannot be HOS information. The Noticees being well acquainted with the working of the securities market and sensitive information couldn’t have been negligent over the materiality of an information received. Moreover, no alarm was raised even when they found out that the circulated information matched the announced financial results accurately. Therefore, the Noticees have deliberately circulated the information by taking advantage of its price sensitive nature.

5. Though it was a part of the work profile of the Noticees to inform their clients regarding the speculative financial information, in the present case, such information was shared to individuals who were not connected to the stock broking companies in which the Noticees were employed in and the Companies to whom such information pertains to.


a) [1]Regulation 2(1)(g) of SEBI (Prohibition of Insider Trading) Regulations, 2015 (“SEBI (PIT) Regulations) elucidates who is considered as an insider. Any person in possession or having access to UPSI is construed to be an insider irrespective of how such UPSI was transmitted to the Noticees. The Noticees are deemed to be insiders regardless of the fact that the link to the leak of PSI could not established.

b) [2]Regulation 3(1) of SEBI PIT Regulations prohibits the communication of UPSI by an insider. The law does not grant excuse to the Noticees from the guilt of communicating PSI merely because the recipients of the information did not deal with the securities of the Company.

c) In order to safeguard the integrity of the securities market, it is not considered appropriate to give a liberal thought and benefit of doubt to the conduct of the Noticees considering the recurring act of the leak of information over WhatsApp.

d) The Noticees had communicated UPSI to other individuals which tantamount to the exploitation of the other investors who do not have access to UPSI to make informed decisions.

e) The Noticees had violated the provisions of Sections [3]12A(d) & [4]12A(e) of the SEBI Act, 1992 and Regulation 3 (1) of SEBI (PIT) Regulations, 2015


1. The obligation to maintain a structured digital data base as mandated under SEBI (PIT) Regulations will act as a safe harbour for companies in tracking any leakage of UPSI.

2. One needs to see if these decisions are being appealed, as the reasoning of the AO without establishing a link with the source of information sets a precedent that goes beyond the stated intent of the regulation.

[1] Regulation 2(1)(g) – “insider” means any person who is:

  1. A connected person, or
  2. in possession of or having access to unpublished price sensitive information

[2] Regulation 3(1)No insider shall communicate, provide, or allow access to any unpublished price sensitive information, relating to a company or securities listed or proposed to be listed, to any person including other insiders except where such communication is in furtherance of legitimate purposes, performance of duties or discharge of legal obligations.

[3] Regulation 12A(d) – No person shall directly or indirectly engage in insider trading

[4] Regulation 12A(e)No person shall directly or indirectly deal in securities while in possession of material or non-public information or communicate such material or non-public information to any other person, in a manner which is in contravention of the provisions of this Act or the rules or the regulations made thereunder.

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