Circulation of UPSI on WhatsApp leads to Settlement Order in Wipro Case
Since the Applicant's disclosure of unpublished price sensitive information in a WhatsApp message violated SEBI regulations, he had to remit INR 28 lakh towards settlement charges
In the matter pertaining to the violation of Regulation 3(1) of the Securities and Exchange Board of India(SEBI) Prohibition of Insider Trading Regulations, 2015 and Sections 12A(d) and (e) of the SEBI Act, 1992, the Applicant has remitted the sum of around Rs. 28 lakh towards settlement charges.
Herein, the SEBI had observed from a newspaper article that unpublished financial results of some major companies were posted on a private WhatsApp group prior to their announcement by the respective companies. Wipro Ltd. (Wipro)was one of the companies about which information was leaked on the WhatsApp group. In this respect, the SEBI had conducted an investigation.
It was observed in this investigation that the WhatsApp message –"Wipro revenue 13700 PBIT 2323 PBT 2758" dated January 18, 2017 was found in the WhasApp chat of Ms. Shruti Vora, a member of the Market Chatter group whose device was seized by the SEBI. Based on the available evidence, it was observed during the investigation that the referred WhatsApp message was received by Ms. Vora from Shri Govind Agarwal (the Applicant) through WhatsApp on January 18, 2017.
The Applicant was working as a research analyst and as part of his job, he was required to attend the quarterly conference calls, analyse the results, and prepare research reports. The financial figures of Wipro communicated on WhatsApp, before the disclosure of the same on the stock exchanges by Wipro, were within the range of 0.03% to0.47% of the actuals.
It was observed by the SEBI in the investigation that the above information fell under the category of Unpublished Price Sensitive Information (UPSI)and disclosure of the same by the Applicant in the WhatsApp message resulted in the violation of Regulation 3(1) of the SEBI (Prohibition of Insider Trading) Regulations, 2015 and Sections 12A(d) and (e) of the SEBI Act, 1992.
The Applicant, vide an application filed on May 18, 2020, proposed to the SEBI to settle the instant proceedings without admitting or denying the findings of facts and conclusions of law, through a settlement order and filed settlement.
The High Powered Advisory Committee (HPAC) in its meeting, considered the settlement terms proposed and recommended the case for settlement upon payment of Rs. 27,89,063towards settlement charges.
The Panel of Whole Time Members of the SEBI approved the said recommendation of the HPAC on September 28, 2020 and the same was communicated by SEBI to the Applicant vide email dated September 29, 2020.
This order made clear that the Applicant has remitted the aforementioned amount through RTGS towards settlement charges. The said information has been communicated by the Applicant to the SEBI and the concerned department of the SEBI has also confirmed the receipt of the settlement charges.
Hence, in view of the acceptance of the settlement terms and receipt of settlement amount as above by the SEBI, the instant adjudication proceedings initiated against the Applicant have been disposed of in terms of section 15JBof the SEBI Act, 1992, read with regulation 23(1) of the Settlement Regulations on the basis of the settlement terms.