Indian market regulator has conducted a series of raids to know whether the market participants were prematurely leaking the corporate announcements through the present social media chatrooms.
Despite the large scale action, according to the four lawyers including two former employees of regulator, Securities Exchange Board of India (SEBI) is to face tough legal questions and challenges in prosecution.
On December, 22 SEBI raided broker’s offices and homes and seized mobile phones and laptops. SEBI has been guaranteed broad search and seizure powers under the law and these powers would enable SEBI to withstand any challenge against the seizure in the court.
But the question which still has not been established is that whether the SEBI has the legal right to get into the individual's social account. It was said by the lawyers that there is not any law which grants the power to SEBI to access individual’s social accounts and compel them to give their passwords.
It was stated that SEBI has to make a case and prove that the social accounts are covered under the books, registers, other accounts and records.
Responding to this SEBI official said that they have enough powers to proceed and they will be able to prosecute any case successfully. He further stated that though there is no precedence in this regard but the market participants cannot hide behind the technology.
The former enforcement head of SEBI however said that accessing the social media account of a person is a constitutional breach of privacy. In August, in a landmark judgement of apex court it was held that the right of privacy is a part of fundamental rights.
Another former SEBI official said that one of the major challenges to be faced by SEBI is the privacy issue. The aspects can which can be challenged before the court will include the procedure of how device was accessed or the power of the court to issue the warrant.
Investigation was triggered by the SEBI after the instances of the predicted results of the market were leaked in the private whatsapp group.
India’s law on insider trading provide that it is illegal to circulate the unpublished price sensitive information. The lawyers said that SEBI would need to conclusively prove that any messages posted by those under investigation qualified as constituting unpublished price sensitive information.
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