The market regulator routinely collects call data of individuals it is investigating. It took the persistent efforts of an RTI activist to ferret out the fact that SEBI had collected records of a massive 2,327 subscribers, although it is legally not authorised to do so
The Securities and Exchange Board of India's (SEBI) celebrated investigation into the Pyramid Saimira scam was the starting point of the regulator seeking call records of people it is investigating.
At a time when industrialist Ratan Tata has approached the Supreme Court (SC) demanding protection of privacy and when the government has admitted that it is duty bound to protect conversations obtained through phone tapping, it is pertinent to know that government agencies such as SEBI have been routinely demanding call data without authorisation. Worse, most telecom operators have been supplying information without even knowing the facts.
In the landmark case of the People's Union for Civil Liberties versus the government, the SC ensured that the Department of Telecommunications (DoT) explicitly designate the agencies that can obtain telephone data. This includes the director general (DG) of police or commissioner of police at the state level and eight national agencies-the Intelligence Bureau, DG-Narcotics Control Bureau, DG-Directorate of Enforcement (ED), DG-Central Economic Intelligence Bureau, DG-Directorate of Revenue Intelligence, Director of Central Bureau of Investigation (CBI), DG-National Investigation Agency (NIA), Member (Investigation)-Central Board of Direct Taxes and Directorate of Signal Intelligence, Ministry of Defence (for J&K, North East and Assam areas only). SEBI is not on the list and has been trying hard to be included.
The DoT, in a letter, dated 10 December 2009 (a copy of which is available with Moneylife), clearly said that SEBI is not an authorised enforcement agency for intercepting or monitoring calls. P Chidambaram too had turned down SEBI's request when he was the finance minister.
Yet, in the Pyramid Saimira case, the market regulator sought records of several entities only to learn, long after its first report, that a SEBI manager had forged a letter (at the behest of a former promoter of the company), which caused wild fluctuations in the stock price and triggered a massive investigation that has killed the company.
The story gets even more curious when a Right to Information (RTI) activist filed a query in August 2010 seeking information on the total number of telephone/mobile connections in respect of which information was sought from service providers. SEBI's first reaction was to reject the request on the grounds that it would hamper ongoing investigations.
The RTI activist filed an appeal in November 2010, saying that he had not asked for specifics, but only the total number of cases in which information had been sought. When the appeal was allowed, SEBI responded on 7 December 2010 saying that it has sought call records for a total of 13 numbers, of which call records for five had not been received from the service provider.
Refusing to believe that the number was so tiny, the RTI activist filed a second query on 20th December. This time he asked for file notings/green notes of various SEBI divisions dealing with the issue.
All of a sudden, on 21st December, SEBI sent another reply giving point-wise additional information, which says it has been collecting call record data of about 2,327 subscribers. In effect, just 14 days later, the market regulator reported that there were not 13 but 2,327 subscribers whose call records had been sought. Of these, 1,774 records were sought by simply writing a letter to telecom operators. We learn that SEBI often seeks information without even initiating a formal investigation. In addition, it has authorised fairly junior officials to deal with the telecom companies.
This raises a lot of questions. Giving wrong information under the RTI Act is a serious offence. In this case, SEBI provided the information in a letter dated 21st December saying that "in continuance" of its earlier letter with false and incomplete data (that it sought only 13 telephone records), it was providing "point-wise additional information" with regard to the query. Would this information have been provided if the RTI applicant had not filed a follow-on query seeking green notes and file notings? Was SEBI trying to fudge facts? Clearly, the benefit of doubt does not go to the regulator. It also introduces a new element of how the regulator tries to fudge facts to hide the fact that it is seeking unauthorised data.
The questions now is whether the government will legitimise SEBI's actions or stop it from seeking such information.
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