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FinMin backs Sebi demand to access phone call transcripts

Anirudh Laskar & Rajesh S Kurup  |  Mumbai 

Move aimed at strengthening Sebi’s powers to investigate market-related offences.

The finance ministry has backed the capital market regulator’s request to give it more powers to access transcripts of telephone conversations and related information. This is aimed at strengthening the Securities and Exchange Board of India’s powers to investigate market-related offences.

The ministry has requested the Department of Telecommunications (DoT) to allow Sebi to join 10 other agencies that look into telecom companies’ operations and books. These include the local police, Central Bureau of Investigations (CBI), Enforcement Directorate (ED), Special Frauds Investigation Cell, Economic offences Wing (EoW), Intelligence Bureau (IB), Income-Tax (Enforcement), Ministry of Defence and Research & Analysis Wing (R&AW).

The move to include Sebi in DoT’s list of inquiry and enforcement authorities would also enable Sebi to summon for call data records from licensed service providers, apart from giving it the power of inquiry and enforcement.

Sources close to the development told Business Standard that Sebi, which is mandated to protect the interest of investors and regulate the securities market, often needs to conduct market surveillance to detect and prevent manipulations. This is to maintain orderly conduct and integrity in the securities market.

“For the purpose of prompt surveillance and effective investigations, examination of various documents including telephone records of suspected persons are crucial to establish the role of market manipulators, especially in insider trading cases," added the source.

Sources, however, said some officials in the home ministry and DoT are against empowering Sebi to scrutinise companies’ records as the EoW already has the power to look into such offences.

The finance ministry has, however, argued that since Sebi has the same powers as given to a civil court under the Code of Civil Procedure for inspection of documents of any person involved in market manipulations, there should be no problems in giving it the necessary powers.Recently, Sebi accessed phone records for its investigations in the Pyramid Saimira case and decided to debar one of the large investors of the company for manipulating the stock price.

Most telecom operators by law are required to maintain voluminous records of calls made on their network but the records can only be accessed by a few agencies.

“Sebi has been experiencing that telecom companies are not forthcoming with cyber information in the form of telephonic transcripts or other information sought by while discharging its functions of enquiry and enforcement," the finance ministry added.

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First Published: Wed, May 13 2009. 00:22 IST