SEBI cracks down on intermediaries' distribution of unauthenticated news | Business Upturn

SEBI cracks down on intermediaries’ distribution of unauthenticated news

The regulator advised the intermediaries that access to blogs, chat rooms, and messenger, where unreliable stock market news was being disseminated, should be controlled.

In order to address the rise in the dissemination of unverified news by Sebi-registered market intermediaries through a variety of communication channels, the Securities and Exchange Board of India on Tuesday issued a directive to market intermediaries requiring them to implement internal codes of conduct and controls.

This comes after the regulator claimed to have seen that workers of brokerage firms and other intermediaries were disseminating a lot of unverified stock-related news via blogs, chat rooms, emails, and discussion boards. As required by the code of conduct for stock brokers and the applicable rules for the numerous intermediaries registered with Sebi, this is being done without any caution.

The regulator advised the intermediaries that access to such blogs, chat forums, and messengers should be controlled or prohibited.

Workers should be advised not to forward any market-related news they may obtain via email, blogs, personal or official mail, or in any other means unless it has been examined and approved by the compliance officer of the appropriate intermediary.

If the employee disobeys, it should be assumed that he or she has violated one of the many rules set down in the Sebi Act and as a result, will be punished. According to the circular, the compliance officer in this instance ought to be held liable for any infractions of duty-related laws.

“Due to lack of proper internal controls and poor training of employees of such intermediaries are sometimes not aware of the damage which can be caused by circulation of unauthenticated news or rumours. It is a well-established fact that market rumours can do considerable damage to the normal functioning and behavior of the market and distort the price discovery mechanisms,” Sebi said in the master circular.

The market regulator gave the intermediaries instructions not to spread untrue information obtained from customers, businesses, the trade, or other sources without sufficient validation to their temporary personnel, volunteers, or other members of the workforce.