India’s securities regulator could get the power to tap people’s phone calls

• A high-level committee led by T.K. Viswanathan, the former secretary of the Law Ministry, has recommended that SEBI be allowed to listen in on people’s phone calls.
  
• Given the public outcry over data privacy and surveillance, the measure could prove controversial and hard to implement.
  
• The panel made a number of other recommendations such as the implementation of stringent protection measures for whistleblowers.
  

As a number of high-profile insider trading cases have piled up in the recent past, the most prominent of which include the sharing of information about the earnings of some companies like Tata Motors and Axis Bank over Whatsapp groups in late 2017 ahead of the official release of these results.

In a bid to crack down harder on this kind of activity, the Securities and Exchange Board of India (SEBI), the country’s securities and markets regulator, is planning a series of sweeping measures.

A key measure could be the ability to intercept phone calls.

On August 8th, a panel on fair market conduct led by T.K. Viswanathan, the former secretary of the Law Ministry, recommended that the securities regulator be allowed access to suspect’s electronic devices and have the ability to listen in on their phone calls and intercept other forms of electronic communication like emails. It is currently only allowed to access the call records of suspects.

Given the public outcry over data privacy and surveillance, especially related to the Aadhar programme, the measure could prove controversial and hard to implement. In August 2017, the Supreme Court ruled that privacy was a fundamental right.

In order to pass political muster, the proposal will have to supplemented by an adequate mechanism to ensure that the SEBI does not misuse this power. The public will allowed to submit their views on the panel’s report by August 24th.

The move isn’t completely without a precedent. In addition to the police, the Central Board of Direct Taxation is allowed to the tap the phones of people that are suspected of tax evasion and money laundering.

The panel made a number of other recommendations. It said that companies should readily hand over information about the immediate family members and close associates of suspects who possessed the price-sensitive information. In the Whatsapp case, the suspects were mostly employees of the firms. It also recommended the implementation of stringent protection measures for whistleblowers.