Sebi may get access to emails, records

FinMin meeting this week to discuss giving more power to the regulator to check insider trading, after Rajat Gupta case in the US

Following a renewed demand last month from the Securities and Exchange Board of India (Sebi) to allow it to utilise telephone call records as evidence in insider trading cases, the government has hastened the process of providing the equity markets regulator a green signal.

A senior finance ministry official told a high-level meeting called by economic affairs secretary R Gopalan was slated to take place on Wednesday to discuss the issue of adding Sebi to the list of enforcement and investigating agencies allowed to ask the department of telecommunications for emails and call data records from service providers.

The official said the Telecom Regulatory Authority of India was likely to support this move. Sebi, in fact, has been requesting the finance ministry for the past three-odd years to allow it access to telephone call records whenever required for carrying out investigations.

In the backdrop of the way authorities in America used wire tapping evidence to successfully prosecute Goldman Sachs’ board member Rajat Gupta in an insider trading case, Sebi chairman U K Sinha told reporters in Mumbai last month that the market watchdog had asked for government’s approval to use call data records for determining insider trading.

Sebi does not have powers to undertake wiretapping, which involves recording of conversations between suspects. Nor does its US equivalent, the Securities and Exchange Commission. Sebi is not seeking the power to wiretap but it seems to want the more basic right of access to call records and data records from service providers.

This will give the regulator basic information such as who called whom, when and for how long. Sebi had earlier used the mobile phone records of suspects to establish their having met. In a landmark case in 2009, Sebi investigation chief Pradnya Sarvade had used the mobile tower locations of three accused in the Pyramid Saimira forged letter case to establish that they’d met at a Mumbai hotel before they implemented their plan.

The access to call records from telecom operators of persons suspected to be involved in insider trading and other similar offences related to stock markets would help the regulator gather and present evidence against them. This could become circumstantial evidence to prosecute persons involved in insider trading.