India's markets regulator SEBI is seeking broader powers from the government to remove unauthorized financial advice from social media platforms such as WhatsApp and Telegram, as well as access to their call records for investigations into market violations.
This is the second time since 2022 that the Securities and Exchange Board of India has requested such powers, with government approval still pending.
The request comes as the regulator ramps up investigations into market violations and cracks down on unregulated financial advice circulating on social media.Despite an earlier meeting with the regulator, social media companies have yet to comply with the government's request for access to their call data records, as well as groups and channels, according to Sebi.
Sebi's latest letter, sent last week, stated that companies such as Meta Platforms' WhatsApp have denied the regulator access to their social media group chats because current information technology law does not recognize the capital markets watchdog as a 'authorised agency.'
The regulator requested the authority to "take down any messages, information, links, and groups on social media channels if the content violated the securities regulations," according to the letter.
It also requested permission to access call or message data records communicated via digital or social media channels.
Such powers are currently held by other law enforcement agencies, such as the Tax Department, Department of Revenue Intelligence, and Enforcement Directorate, but not by 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 dated February 3.
The letter's contents have not previously been reported.
In a revised statement emailed to Reuters on Friday, Telegram stated that it is in regular contact with various departments of Sebi and processes all valid requests.
In a revised statement emailed to Reuters on Friday, Telegram stated that it communicates with various Sebi departments on a regular basis and processes all valid content moderation requests that are submitted with the required documentation.
"Telegram is fully cooperating with the concerned authorities to process their requests around content moderation or blocking groups or channels, after performing the necessary legal checks, as per the guidelines of the IT Act 2000," it continued.
"However, Telegram cannot provide access to call data due to the structural design of its technical architecture." The revised statement removed a reference to a previous statement issued on Thursday, which stated that "Telegram has not denied access to Sebi" without providing further details.
There are several ongoing investigations into market manipulations such as front-running and insider trading that require the regulator to obtain records from these social media groups, according to a government official with direct knowledge of the situation.
WhatsApp groups and Telegram channels have become popular among market participants, with financial influencers offering trading tips on specific stocks and other securities in exchange for money.
Earlier Request
In August 2022, Sebi Chairperson Madhabi Puri Buch made a similar request, requesting that the government grant more authority to access the exchange of information among alleged suspects involved in crimes such as insider trading via digital resources.
The government did not grant those powers, but instead called a meeting of its various departments, including Sebi, with Meta representatives to direct them to provide all relevant information about ongoing investigations.
The government is reviewing Sebi's new request, but an official stated that such powers are typically reserved for serious crimes, and any decision to grant these powers would necessitate a broader policy decision for all regulators.
Developed countries, including those in Europe and the United States, do not give their securities regulators direct authority to remove social media posts. They do, however, have the ability to penalize individuals who engage in illegal activities such as fraud and misleading advertising.
