Sebi scans Facebook 'likes'; finds evidence in insider trading case

To catch manipulators, The Securities and Exchange Board of India (SEBI), a market regulator has started hunting for Facebook accounts of suspected persons, with ‘friends’ and ‘likes’ for posts being scanned in insider trading cases.

The watchdog is checking the profiles to ascertain whether they are ‘connected’ in any case related to violation of insider trading norms.

SEBI, after going through an intensive check related to Deep Industries has found that entities involved in insider trading were ‘friends’ on Facebook and they ‘liked’ photos and posts on the platform.

"The profiles of these persons were having restricted access and the photos posted by them can be 'liked' only by select persons whom they have added as their 'friends' on Facebook," the regulator said in an order dated April 16.

The regulator board has ordered impounding of unlawful gains worth over Rs 2.4 crore from three entities involved in the case, after gathering evidence about violations.

The three entities – Rupeshbhai Katilal Savla, Sujay Ajitkumar Hamlai and V Techweb India Pvt Ltd, were allegedly ‘connected entities’ and had traded in Deep Insustries Ltd (DIL) shares while possessing price-sensitive information.

According to SEBI, DIL’s Managing Director Rupeshbhai Kantilal Savla and his wife Sheetal Rupesh Savla were aquainted to the two directors of V Techweb – Ajay Ajitkumar Hamlai and Sujay Ajitkumar Hamlai via Facebook.

"... they had social relationship which also can confer access to UPSI as envisaged in Sebi's PIT (Prohibition of Insider Trading) regulations," the order said.

Under SEBI guidelines, a person or an entity is considered an insider on the basis of different aspects, including by way of their association in any capacity with the company concerned and has access to unpublished price sensitive information.

Even those who are constantly involved in communication with officers through ‘likes on social media’ of the company concerned can also be considered as insiders.