Sebi asks Tata Motors to probe Whatsapp earnings leak

Data leaked on WhatsApp closely matched actual figures

The Securities and Exchange Board of India (Sebi) asked Tata Motors to probe the leak of its December 2015 quarter earnings on social media platform WhatsApp.

A preliminary examination by the markets regulator showed the financial numbers circulated through WhatsApp posts closely matched the actual results.

Sebi has directed Tata Motors to "conduct an internal inquiry into the leakage of unpublished price-sensitive information (UPSI) relating to its financial results and take appropriate action against those responsible". It has given three months to the Tata Group company for completing the probe.

Sebi has also the company to strengthen its processes, systems and controls to "ensure such instances of leakage of UPSI do not recur".

"Such leakage is prima facie attributable to the inadequacy of the processes, controls and systems that Tata Motors as a listed company had put in place. While procurement or communication of UPSI by any person is identified as a violation of Regulation 3 of the Prevention of Insider Trading Regulations and Section 12A(e) of the Sebi Act, it becomes incumbent upon every listed company to put in place processes, controls and systems that would ensure such procurement or communication of UPSI does not take place," said Madhabi Puri Buch, wholetime member at Sebi, in the order.

Tata Motors in its reply to Sebi had said it followed a process to safeguard UPSI. "The company ensures there is a prescribed singular information flow channel, which restricts the availability of such financial information with a limited number of people, who require the same to discharge their duties," it told Sebi.

It had provided Sebi the chronology of events relating to preparation of the December 2015 quarter's financials.

The issue of earnings leak on WhatsApp was first known via an investigative report by news agency Reuters. The report had named 12 companies whose earnings were circulated in advance. Some of thse named in the report were Dr Reddy's, Cipla, Wipro and Bajaj Finance.

Sebi in the recent past has issued similar directives to Axis Bank and HDFC Bank. It is said to be examining more companies in this regard.