WhatsApp leak case: Sebi directs Axis Bank to finish internal probe in three months

Mail Today Bureau        Last Updated: December 28, 2017  | 09:25 IST
WhatsApp leak case: Sebi directs Axis Bank to finish internal probe in three months

Capital markets watchdog Sebi on Wednesday directed Axis Bank to strengthen its systems and conduct an internal probe to fix responsibility in the WhatsApp data leak case. Sebi has found in its initial investigation that the bank's quarterly results were leaked due to inadequacy of processes at the bank. Axis Bank has to complete the inquiry within three months and file a report with Sebi.

The investigation has revealed that the company's results for the April-June 2017 quarter were either identical or matched closely with the figures that were in circulation on WhatsApp prior to an official announcement. Sebi had begun a probe last month after a media report surfaced with respect to circulation of Unpublished Price Sensitive Information (UPSI) in various private WhatsApp groups about certain companies, including Axis Bank, ahead of their official announcements.

The regulator also conducted search and seizure operations in this regard at various places, including on the premises of various market entities. This is the first order from Sebi in this case and several others may follow soon. It was observed that the figures that were in circulation in WhatsApp groups about Axis Bank were either matching in totality or were close to the actual announcements except figures for slippage, Sebi said.

The regulator subsequently sought information from Axis Bank and asked it to submit information regarding the processes and controls it has in place regarding UPSI handling. In response, Axis Bank submitted that it has ensured adherence to the applicable laws and adopted adequate processes and controls to maintain confidentiality of price sensitive information relating to the bank.

It also submitted that access or communication of such information is made or done on a need to know basis. It also provided particulars of the processes and controls in that regard.

Axis Bank also provided the chronology of events relating to preparation and finalisation of its financials relating to the quarter -- submitting that the process started from July 1, 2017 and the financial results were formally disclosed on July 25, 2017. Since July 1, various rounds of meetings and discussions were conducted among Axis bank officials and auditors.

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