SEBI directs Axis Bank to probe data leak

Bank’s financial results were available on a WhatsApp group before announcement on bourses The Securities and Exchange Board of India (SEBI) has directed Axis Bank to conduct an internal inquiry to ascertain how key financial information was leaked on a WhatsApp group before it was officially announced on the stock exchange platform. ‘First such order’ The directive assumes significance since it is the first order by the capital market regulator in the matter related to alleged leak of unpublished price-sensitive information on the social media platform. SEBI directed the bank to complete the inquiry within three months and also strengthen its processes to ensure such leaks did not recur. “Axis Bank shall conduct an internal inquiry into the leakage of unpublished price-sensitive information relating to its financial results and take appropriate action against those responsible for the same, in accordance with law,” stated the four-page order by G. Mahalingam, whole-time member, SEBI. “Axis Bank shall strengthen its processes/systems/controls forthwith to ensure that such instances of leakage of unpublished price sensitive information do not recur in future... The inquiry directed above shall be completed within a period of 3 months,” added the order. “The bank will work with SEBI and the best experts in the field to investigate the matter and will take action as appropriate,” said Rajesh Dahiya, executive director, Corporate Centre, Axis Bank, in an e-mailed statement. Preliminary probe According to the regulator, its preliminary probe revealed that the messages circulated in WhatsApp groups almost matched with the quarterly financial results of Axis Bank for June 2017. The actual results were announced on the stock exchanges on July 25, 2017 at 4.23 p.m. but as per media reports the numbers were in circulation on July 25 since 9.12 a.m., said the order. “... prima facie (it) appears that the financial results of Axis Bank for quarter ended June 2017 were finalised by July 24, 2017, which was before circulation of WhatsApp message on July 25, 2017,” according to the SEBI order. The same could not have been possible without leakage of information from the persons, who were privy to the information relating to financials prior to its official announcement, it added. According to the regulator, such leakage is prima facie attributable to the inadequacy of the systems that the bank had put in place. Incidentally, the regulator’s order comes almost a week after the regulator conducted raids at 34 locations aimed at members of a particular WhatsApp group on which financial information is alleged to have been shared.