WhatsApp refuses to share user-specific data with SEBI

Instant messaging platform WhatsApp has declined to share user-specific data with the Securities and Exchange Board of India (Sebi), citing its privacy policy.

The market regulator had written to WhatsApp, seeking information on the origin of messages that allegedly contained unpublished price-sensitive information of listed companies, sources said. The information is crucial for Sebi’s investigation into the leakage of financial data at blue-chip companies.

Under current regulations, WhatsApp is not obliged to provide the information to Sebi. The regulator could pursue the matter by moving court against WhatsApp, experts said. However, such a move could be sensitive since it might amount to an infringement of personal space.

An email sent to Sebi seeking comments remained unanswered. WhatsApp declined to comment on the matter. According to Sebi’s insider trading rules, mere possession of unpublished price sensitive information does not amount to wrongdoing, but trading on the basis of it amounts to a serious violation. As a result, the regulator will need substantial evidence to nail those who could have benefited.

“The root source of information can be very effective in zeroing down on the culprits. However, based on the response received from WhatsApp, it is clear that the social media firm is not keen to oblige.

Globally, there have been several cases where social media platforms have declined to share user-specific information with government agencies. These have often resulted in bitter legal battles,” a source privy to the development said.

Another key concern for WhatsApp seems to be the fact that sharing data with Sebi could set a precedent. If the market regulator manages to get the information from WhatsApp through court intervention, other government agencies could file similar cases.

This is not the first instance when Sebi has gone outside its ambit to seek specific information. In 2014, it had sought call records and tower location data of individuals from telecom service providers. The Indian Council of Investors (ICI) filed a public litigation against Sebi challenging the regulator’s power to seek such information. The Bombay High Court delivered a judgment in favour of the market regulator.

“Under Section 11 of the Sebi Act, 1992, Sebi has wide powers to protect the interests of investors in the securities market. Sebi has the same powers as those vested in a civil court under the Code of Civil Procedure, 1908, in respect of matters such as discovery and production of books of account and other documents. In the Sahara case, the Supreme Court has upheld that measures to be adopted by Sebi in carrying out its obligations are couched in open-ended terms, with no pre-arranged limits,” said Yogesh Chande, partner at law firm Shradul Amarchand Mangaldas. #casansaar (Source - Business Standard)