Sebi orders probe into WhatsApp leak of Axis Bank’s quarterly results

The Securities and Exchange Board of India (Sebi) on Wednesday directed Axis Bank to strengthen its systems and conduct an internal investigation into the leakage of information through WhatsApp messaging, blaming it on inadequacy of processes at the bank.

In its first order in the WhatsApp leak case, the market regulator has asked the bank to fix responsibility for the leak after it found 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.

Axis Bank has been asked to complete the inquiry within three months and file a report with Sebi within seven days thereafter.

Axis Bank has agreed to ensure adherence to the applicable laws and has adopted adequate processes / controls to maintain confidentiality of price sensitive information relating to the Bank. It also submitted that access or communication of such information is made / done on a need to know basis. It also provided particulars of the processes / controls in that regard.

On the basis of the chronology of events relating to preparation and finalisation of financials relating to June 17 quarter by Axis Bank, it was observed that the  process  for  generation  of data  started from  1 July  2017  and  the  financial results were formally disclosed on 25 July 2017.

''It prima facie appears that the financial results of Axis Bank for quarter ended June 2017 were finalised by 24 July 2017, which was before circulation of WhatsApp message on 25 July 2017… It is observed that the financial figures pertaining to the quarterly results of Axis Bank were either identical or matched closely with the figures (except for slippage figure) that were in circulation prior to its official announcement by Axis Bank. Such resemblance of the information circulated in the WhatsApp groups with the actual financial results prima facie indicates that the financial figures of Axis Bank were in circulation prior to official announcement / publication by Axis Bank,'' Sebi noted.

Sebi began a probe last month following a media report of Unpublished Price Sensitive Information (UPSI) in various private WhatsApp groups about certain companies, including Axis Bank, ahead of their official announcements.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.