Sebi keeping tabs on social media for insider trading clues

In December, the Securities and Exchange Board of India (Sebi) passed an order in an insider trading case pertaining to Fidelity Group after tying two of the accused to a profile in jainshubhbandhan-.com, an online matrimonial site.Matrimonial sites, Facebook and Instagram — social media is becoming a hunting ground for Sebi as it seeks to trace connections in various insider trading cases, especially when it’s unable to establish links through conventional ways such as know-your-customer (KYC) documents or bank account transactions, said people with knowledge of the matter.In an ongoing insider trading probe in a leading private lender’s stock, the market regulator found a connection between two individuals accused of financial misconduct in a picture showing both of them on Instagram, said a person with knowledge of the matter. The order in this case is expected in the next few weeks.Sebi’s whole time member had passed an order in an insider trading case based on a Facebook connection in late 2018. Insider trading cases are hard to prove since the investigating officer has to establish a nexus between the person who had access to inside information and the one who traded on it. Insider traders use unpublished price sensitive information, not available to the public, to their advantage. “The offenders are increasingly getting smart and leaving no trail in the conventional channels,” said a regulatory official. “Hence the regulator is forced to explore new methods to bring them to book.” Sebi’s emphasis on new technology including artificial intelligence and big data is also helping, he said. 73053254 Market participants and legal experts said social media connections may not be enough to prove insider trading cases.“Such an approach in this day and age may not work because social media is all pervasive and a mere connect may not necessarily entail access, especially when people connect on social media for myriad reasons such as business networking and shared interests,” said Tomu Francis, partner, Khaitan & Co.Sebi is not alone in checking social media. Government agencies globally are sifting through them to gather evidence since this doesn’t need a warrant or subpoena as it’s publicly available information. For instance, the US Securities and Exchange Commission issued a notice in 2012 against Netflix based on a Facebook post.“Social media is subject to the same rules of evidence as paper documents or other electronically stored information, but the unique nature of social media as well as the ease with which it can be manipulated or falsified creates hurdles to admissibility not faced with other evidence,” said Salman Waris, managing partner, TechLegis Advocates, a Delhi law firm that specialises in technology related matters.“Social media feeds are being increasingly used in courts to support or rebuff claims,” said Tanya Sadana, principal associate, Ikigai Law. “However, it may be introduced as evidence only if it is in issue in that trial or if it is relevant to any fact in issue in the trial.”

from Economic Times https://ift.tt/37oZYJa