The Securities and Exchange Board of India (SEBI) is in the process of enhancing its own analysis and surveillance of social media using artificial intelligence and big data analytics. Social media platforms have tons of data and the task of monitoring this data can be complex. SEBI can also follow the IT ministry’s Project Insight, which uses AI and analytics to generate a 360-degree profile of taxpayers to find those under-reporting incomes.
The securities watchdog has in recent times caught crooks by logging into Facebook and online matrimonial websites.
Mr Ajay Tyagi, the Chairman of SEBI said that the market regulator is currently in the process of building its social media technological capability to monitor and prevent market manipulation.
In 2018, in a case related to Deep Industries, the market regulator discovered that entities involved in an insider trading case were Facebook friends and had regularly liked each other’s posts. In December 2019, SEBI traced links between two entities in an insider trading case pertaining to Fidelity Group to a profile on matrimonial site jainshubhbandhan.com.
The regulator has also sent show cause notices to 10 entities that allegedly leaked unpublished financial information of listed companies on WhatsApp groups with analysts and journalists as members. It is in the process of scanning Instagram to find photographs of individuals, who could be connected to manipulators or insiders in ongoing investigations.
Mr Tyagi added that SEBI has now increased its focus on social media monitoring to establish links between potential offenders in insider trading cases, as conventional tools such as tracking shareholding patterns and know-your-customer rules fail to yield results.
Social network analysis attempts to look up all entities, which are connected to each other. It is not limited in scope to popular platforms like Facebook or Twitter, but also looks for connections on linked platforms and uses a graph database technology to retrieve interconnected information and find hidden patterns.
He further shared “We want to acquire technology and unstructured data analysis because the structured data analysis is not helping much; manipulators use all sorts of things," he said. A tender has also been released for acquiring such technology.
SEBI is enhancing its own analysis and surveillance of social media using artificial intelligence (AI) and big data analytics. He noted “To some extent, we are already doing social media screening relating to corporate announcements, relating to price-volume issues".
While this move could help discourage fraudsters from using social media for any such activities, there is a possibility that the legality of this might be questioned, as this will have privacy implications.