"Employees should be directed that any market-related news received by them either in their official mail/personal mail/blog or in any other manner should be forwarded only after the same has been seen and approved by the concerned intermediary's compliance officer....The compliance officer shall also be held liable for breach of duty in this regard," SEBI said in an addendum.

This comes a day after the Securities and Exchange Board of India (SEBI) announced a new set of guidelines, including restricting access to Internet forums for employees, for market intermediaries to ensure that unsubstantiated news is not circulated.
Failure by any employee to seek approval from the compliance officers before forwarding such material had already been made liable for action.

The move came after growing concerns over some employees indulging in activities like fraud against clients, front-running, circular trading and manipulating share prices through rumour-mongering.

It was intended to prevent dissemination of unauthenticated news which could distort the normal functioning and prices of stocks.

SEBI had said that such news related to various scrips are circulated in blogs, chat forums and e-mails by employees of broking houses and other intermediaries in violation of rules.

"SEBI-registered market intermediaries are directed that ... proper internal code of conduct and controls should be put in place," the circular issued yesterday had said.
It had further said that staff of broking houses and other intermediaries should be discouraged from circulating information obtained from clients or others without proper verification.

"... In various instances, it has been observed that the intermediaries do not have proper internal controls and do not ensure that proper checks and balances are in place to govern the conduct of their employees," SEBI said, adding that such speculative news and "rumors" can affect the functioning of the markets and distort prices of bourses.
The watchdog had further said that access to blogs, chat forum and other sites should either be restricted under supervision or access should not be allowed.A SEBI-appointed committee comprising representatives from various market intermediaries in its representations had earlier suggested the need for such a Code of Conduct.