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Sebi on trail of insider trading.

Market regulator is likely to gain access to phone call records from telecom operators

THE Securities and Exchange Board of India ( Sebi) is likely to get access to call records from telecom operators of persons suspected to be involved in insider trading and other similar offences related to stock markets.

With former commerce secretary Rahul Khullar taking over as the new chairman of the Telecom Regulatory Authority of India ( Trai), the move to give Sebi the power to access phone call data has picked up momentum.

Sources said Khullar sees merit in the Sebi demand and is keen to give the market regulator the power to access call data available with telcos to check the menace of insider trading.

Alarmed over the increase in cases of insider trading and other stock market violations, Sebi had in 2009 requested the finance ministry to allow it access to telephone call records whenever required for carrying out investigations.

However, the matter was in limbo for the past three years.

Now, with things beginning to move on the issue, Sebi will be soon empowered to get call details from telecom operators, said a Trai official. This could become " circumstantial evidence" to prosecute persons involved in insider trading, said another source.

Sources also said it is impossible to link and get connected to the chain of people involved in such frauds as it is not limited to any particular place city or a state but largely involves people from across the country. " As we do not have access to call records, it becomes difficult for us to investigate offences. This has been a major impediment for us as telecom operators do not provide us with call records of people we suspect. Once we are empowered to ask for call records from telcos, it will really help us a lot in investigating violations," said a Sebi official.

The government has largely been reluctant to give Sebi access to phone records. The department of telecommunications ( DoT) in a letter dated December 10, 2009, said Sebi is not an authorised enforcement agency for intercepting or monitoring calls. Call data records are often demanded by enforcement agencies and the income tax authorities.

According to Sebi, price rigging and market manipulation contribute to around 55 per cent of their investigations, 26 per cent concerning issues related to manipulations, nine per cent for insider trading, six percent for takeover and two percent each for fake stock investments and other cases.

SEBI is currently looking into several cases of violation of stock market rules and financial frauds.

Flagging its concern over rising incidents of insider trading, Sebi's executive director Usha Narayanan had in March this year said that it was working to sort out the issues.

A recent case pertains to insider trading in shares of Indraprastha Gas Ltd ( IGL) and other gas transportation companies.

Sebi is also probing into possible front- running and insider trading in shares of more than two dozen companies, including some blue chips, by entities and persons involved in the housing- finance bribery scam unearthed by the Central Bureau of Investigation.

Sebi has examined shares of 213 companies in the last 29 months to investigate instances of price rigging and insider trading.

Sebi had conducted investigation into shares of 175 companies during fiscals 2009- 10 and 2010- 11 on charges of market manipulation and price rigging, capital issue- related manipulation and insider trading, among others.

Brokers are worried. " The intention maybe genuine but this is not the only way to prevent insider trading. Sebi is trying to arm itself with more powers through this route, which is dangerous. It should first accept accountability of protecting investors in the market.

Where is the accountability?" said a broker on condition of anonymity.

DoT in a letter dated Dec 10, 2009, said Sebi is not an authorised enforcement agency to intercept calls

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Publication:Mail Today (New Delhi, India)
Date:May 21, 2012
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