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

To catch manipulators, markets regulator Sebi has started looking at Facebook accounts of suspected persons, with 'friends' and 'likes' for posts being scanned in insider trading cases.

The watchdog checked the Facebook profiles of suspected persons to ascertain whether they were 'connected' in a case related to violation of insider trading norms. After going through the Facebook profiles in the case related to Deep Industries, Sebi found that the entities involved in insider trading were 'friends' on the social networking site and they they 'liked' each other's photos posted 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.

After gathering evidence, also through scanning of Facebook posts, about the violations, Sebi has ordered impounding of unlawful gains worth over Rs 2.4 crore from three entities involved in the case.The three entities -- Rupeshbhai Kantilal Savla, Sujay Ajitkumar Hamlai and V Techweb India Pvt Ltd -- were allegedly 'connected entities' and had traded in Deeep Industries Ltd (DIL) shares while possessing price-sensitive information. They had details pertaining to the company bagging three contracts from ONGC and using it the entities made illegal gains, as per Sebi. According to Sebi, DIL's Managing Director Rupeshbhai Kantilal Savla and his wife Sheetal Rupesh Savla -- also one of the promoters -- were acquainted to the two directors of V Techweb -- Ajay Ajitkumar Hamlai and Sujay Ajitkumar Hamlai -- through Facebook. The Savla couple were also friends with Radhika Hamlai, wife of Ajay Hamlai through the platform.

The regulator found that Ajay and Sujay are associated with DIL by virtue of frequent communication with Rupeshbhai Kantilal Savla. By virtue of this association and frequent communications, they are reasonably expected to have access to the unpublished price sensitive information related to DIL in July-October 2015 period. "... 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 norms, a person or an entity is considered an insider on the basis of various 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 involved in frequent communication with officers, including through "likes on social media", of the company concerned can also be considered as insiders.