Insider trading: Sebi says no to phone-tapping powers

Seeking government's help in getting call data records of persons being probed by it in cases of insider trading and other market manipulations, Sebi says it is not asking for powers to snoop on telephonic conversations.

Sebi needs call data records (CDRs) of entities under its investigation to establish links between two or more parties, who might have had conversations among themselves before or after the incidents of insider trading or other manipulative activities in the market, its chairman U K Sinha said.

"The CDRs can be very useful to establish that two parties have been talking to each other and could be related entities," he said.

CDRs generally list out the number of conversations between two or more entities and are different from phone-tapping, wherein an agency can snoop on or record the telephonic conversations of those suspected to be engaged in some wrongdoings.

Regulators in the US and some other countries have often used tapped phone conversations to prove insider trading and other charges, including in the famous Rajat Gupta case.

The phone-tapping powers are restricted to only a few agencies in India, including the CBI and the tax department.

"We are not asking for powers to snoop on the conversations between two entities or to do the phone tapping. We are only asking for CDR details of the persons that we are investigating and we want to know about the parties they (the entities under probe) have been interacting with," the Sebi chief told PTI in an interview.

Sebi has used CDRs in some cases to prove charges against entities under its probe, but currently it has to depend on other authorised agencies to get these records and it does not have direct powers to ask telecom firms or others for CDRs.     For about two years now, Sebi has been seeking direct powers to access call data records, as it feels that these information being routed through other entities may delay the probe and consequently affect the investigation process.

While Sinha did not comment on the timeframe by when Sebi might get these powers, the government officials have earlier said that a proposal has been mooted by the finance ministry to this effect and a decision might be taken soon.

Stressing on a need to amend the regulations governing its various functions, Sebi chairman said that major changes in the Sebi Act were made last in 2002 and the time has come to further strengthen the enforcement and surveillance powers.

Sinha was speaking on the occasion of Sebi completing 25 years of its existence and the way ahead for it, including the major challenges it faces in discharging its duties.

"A major area where we face difficulties is when we seek information or other records from various entities in theprocess of our investigations.

"What happens is that these entities tell us that they do not fall under Sebi jurisdiction and therefore they are not required to provide information to us. We face lots of difficulties in getting these details," Sinha said.

Photograph: Natalie Behring/Reuters