SEBI Probes Six IndusInd Bank Officials in Insider Trading Case: Report
SEBI investigates six IndusInd Bank officials for insider trading over stock sales amid undisclosed accounting lapses; probe is in early stages.
India’s capital markets regulator, the Securities and Exchange Board of India (SEBI), is investigating six officials of IndusInd Bank over allegations of insider trading. The officials are suspected of selling stock options while allegedly aware of accounting irregularities at the bank before the information became public, according to sources familiar with the matter.
IndusInd Bank shares closed 0.22% higher on Monday ahead of news of the investigation.
The probe centers on the timing of stock option sales by these officials to determine if they breached SEBI regulations and the bank’s internal code of conduct. The investigation is in its early stages, and no formal show cause notices have been issued to the individuals or the bank yet.
Earlier this month, a forensic audit by Grant Thornton revealed that two senior bank executives traded shares while privy to undisclosed accounting lapses. SEBI has reportedly requested a copy of the audit report from the bank.
In March, IndusInd Bank disclosed that incorrect accounting of internal derivative trades created a $230 million shortfall in its $60.8 billion balance sheet. Subsequently, CEO Sumant Kathpalia and Deputy CEO Arun Khurana resigned in April.
Sources noted that exercising employee stock options while in possession of unpublished price-sensitive information constitutes a violation of insider trading rules. While insider trading can lead to both criminal and civil penalties in India, no criminal conviction has yet been recorded. SEBI typically imposes monetary fines and trading bans in such cases.
Under IndusInd Bank’s code of conduct, such violations may also result in clawbacks of bonuses and stock options.
The regulator has additionally sought explanations from the bank regarding the delay in publicly disclosing the accounting issues, which management reportedly became aware of as early as September 2024.
Neither SEBI nor IndusInd Bank have officially commented on the ongoing investigation.
