WhatsApp case: Sebi asks Tata Motors to probe results leak; beef up systems

Markets regulator Sebi today ordered Tata Motors to strengthen its systems and conduct an internal probe to fix responsibility after its initial investigation found leakage of price sensitive information related to the auto maker ahead of official release.
Tata Motors has to complete the inquiry within three months and file a report to Sebi within seven days thereafter, the regulator said after it found that the firm's financial results for the October-December quarter 2015 were matching with the figures that were in circulation prior to official announcement.
This the third Sensex company related to whom the regulator has passed an order in the high-profile case of leakage of sensitive financial details prior to formal announcement of quarterly results.

Earlier, Sebi passed similar orders with respect to Axis Bank and HDFC Bank in the leakage cases.
Reacting to the Sebi order, Tata Motors said it is fully committed to ensuring confidentiality of such price sensitive information.
"This lapse pertains to an incident in 2015. While the company has robust policies and processes to manage such price sensitive information, we will investigate this lapse thoroughly to identify and address process gaps and fix accountability," the auto maker added.

Sebi had launched a probe in November after media reports surfaced with respect to circulation of unpublished price sensitive information in various private WhatsApp groups about certain companies, including several bluechip firms, ahead of their official announcements.

In a detailed order today, the watchdog said that prima facie appears that the financial results of Tata Motors for the quarter ended December 2015 were finalised on or before February 9, 2016, which was before circulation of WhatsApp message on February 11, 2016.
It is observed that the financial figures pertaining to the quarterly results of Tata Motors were matching with the figures that were in circulation prior to its official announcement by the company, the order noted.
"Such resemblance of the information circulated on WhatsApp with the actual financial results prima facie indicates that the financial figures of Tata Motors, were in circulation prior to official announcement/ publication by Tata Motors," it added.

The regulator said at this stage, the source or origin of the leakage of UPSI cannot be ascertained, but it can prima facie be inferred on the basis of the facts and circumstances that the UPSI relating to financials of Tata Motors was leaked.
"Such leakage is prima facie attributable to the inadequacy of the processes / controls / systems that Tata Motors as a listed company had put in place," the regulator noted.
Accordingly, Sebi has asked Tata Motors to "strengthen its processes/ systems/ controls forthwith to ensure that such instances of leakage of unpublished price sensitive information (UPSI) do not recur in future".

It also asked the bank to conduct an internal inquiry into the leakage of unpublished price sensitive information relating to its financial results and take an appropriate action against those responsible, in accordance with law.
Sebi further said the inquiry should include determination of the possible role of persons in relation to leakage of UPSI including persons involved in the consolidation of the figures for the financial results.
Besides, the probe would also cover the persons involved in the consolidation of the figures for the financial results, as also those involved in the preparation of board notes and presentations and in dissemination of information relating to financial results in the public domain. This also included any other persons who had access to the information.