SEBI seeks more control over WhatsApp, Telegram to keep unauthorised financial advice in check, wants access to call records

Amid a crackdown on unregulated financial advice circulating on social media, the Securities and Exchange Board of India (SEBI) wants to wield more powers to crack the whip on unauthorised financial advisors on social media platforms and has approached the government for the same, revealed a Reuters report. 

According to the report, the market regulator wants more control over social media platforms such as WhatsApp and Telegram, in addition to access to call records for investigations into market violations.

Notably, this is the second time SEBI has approached the government with the same request. The first such request was made in 2022 but is pending approval.

The request comes as the regulator has intensified investigations into market violations and clamped down on unregulated financial pieces of 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 a letter sent last week, SEBI 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, adding that companies such as Meta and WhatsApp have denied the regulator access to its social media group chats as the current IT law does not identify the capital markets watchdog as an 'authorised agency'.

It also sought powers to access calls or message data records communicated through digital or social media platforms. "SEBI finds itself limited while investigating serious market violations due to the absence of power to access the equivalent of call data records," according to the letter sent on February 3. 

Currently, such powers are vested with other law enforcement agencies like the Income Tax Department, Department of Revenue Intelligence and the Enforcement Directorate.

In a revised statement emailed to Reuters on Friday, Telegram said it is in regular touch with various departments of SEBI and processes all valid requests for content moderation, which are submitted with the requisite 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 said. "However, Telegram cannot provide access to call data due to the structural design of its technical architecture."

The revised statement removed reference made in a previous statement issued on Thursday that said "Telegram has not denied access to SEBI", without elaborating.

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.

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.

The government is examining SEBI's new request, but the Reuters report, citing an 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.

- With Reuters inputs