Facebook ‘mutual friends’ used to prove insider trading scam

A GROUP of investors engaged in insider trading have been caught out through their mutual friendship on Facebook.

Insider traders nabbed by Facebook

AS THE saying goes, keep your friends close, and your friends of friends closer.

A group of 15 investors in India have been caught out in an insider trading case, with the securities regulator tipping them all as “people you may know”.

According to The Times of India, the Securities and Exchange Board of India (SEBI) has been scouring Twitter and Facebook accounts as part of its investigations for some time, but this case marks the first time the regulator has used “mutual friends” as evidence in a case.

The group, including an employee of global accounting firm Deloitte, were allegedly “connected entities” who traded in shares of Palred Technologies Ltd (PTL) while in possession of price-sensitive information relating to the sale of part of the business.

SEBI’s Prashant Saran said one of the investors Pirani Amyn Abdul Aziz was found to be connected to one of the other investors Ameen Khwaja “through mutual friends on Facebook”.

“(Mr Aziz) was employed with Deloitte Tax Services India Pvt Ltd (a group company of Deloitte Touche Tohmatsu India Pvt Ltd, which had conducted the due diligence of PTL during the slump sale).”

Mr Saran said as the group had violated insider trading laws, “noninterference by the regulator at this stage would therefore result in irreparable injury to interests of the securities market and the investors”.

SEBI alleged the group made profits of 16.6 million rupees ($345,576) from the trades, and has impounded “alleged unlawful gains of a sum of 22.2 million rupees ($462,456)”.

“If the funds are found to be insufficient to meet the figure of unlawful gains, then the securities lying in the demat account of these persons shall be frozen to the extent of the remaining value”, SEBI stated.