By Shubham Batra
NEW DELHI (Reuters) – India’s markets regulator is seeking broader powers from the government to remove unauthorised financial advice from social media platforms such as WhatsApp and Telegram, and to access their call records for investigations into market violations, a government source and a document reviewed by Reuters showed.
This is the second time since 2022 that the Securities and Exchange Board of India (SEBI) has sought such powers, with approval from the government still pending.
The request comes as the regulator has intensified investigations into market violations and clamped down on unregulated financial advice circulating on social media. Social media companies have also not complied with the government’s request for access to their call data records, and groups and channels, despite an earlier meeting with the regulator.
In its latest letter sent last week, SEBI said companies such as Meta Platforms’s WhatsApp have denied the regulator access to its social media group chats as the current information technology law does not identify the capital markets watchdog as an ‘authorised agency’.
The regulator sought powers to “take down any messages, information, links and groups on social media channels if the content violated the securities regulations,” the letter showed.
It also sought powers to access calls or message data records communicated through digital or social media platforms.
Such powers are currently vested with other law enforcement agencies like the Tax Department, Department of Revenue Intelligence and Enforcement Directorate but not with the regulators.
“SEBI finds itself limited while investigating serious market violations due to the absence of power to access equivalent of call data records,” according to the letter sent on February 3.
The letter and its contents have not been previously reported.
SEBI, the finance ministry and Meta Platforms did not respond to emails seeking comment. Telegram could not be immediately reached for comment.
There are several ongoing investigations pertaining to market manipulations such as front running and insider trading, which require the regulator to access records of these social media groups, said the government official who has direct knowledge of the matter.
WhatsApp groups and Telegram channels have become popular among market participants, with financial influencers sharing trading tips on specific stocks and other securities in return for money.
EARLIER REQUEST
In August 2022, SEBI Chairperson Madhabi Puri Buch made a similar request asking the government for more powers to access the exchange of information among alleged suspects involved in offences such as insider trading through digital resources.
The government did not grant those powers but convened a meeting of its different departments, including SEBI, with representatives from Meta Platforms, to direct them to provide all relevant information regarding ongoing investigations.
The government is examining SEBI’s new request, but the official said that such powers are typically only granted for serious crimes, and any decision to grant these powers would require a broader policy decision for all regulators.
Developed countries like those in Europe and the U.S. do not grant direct authority to their securities regulators to remove social media posts. However, they have the capacity to penalise individuals engaged in illegal activities, such as fraud and misleading advertising.
(Reporting by Shubham Batra in New Delhi; Editing by Jacqueline Wong)
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