The Securities and Exchange Board of India has intensified its probe into alleged insider trading by former IndusInd Bank officials, with investigators from SEBI’s investigation department visiting the bank’s Andheri premises on May 15 and questioning officials from the secretarial and compliance departments, sources told Moneycontrol.
The visit marks a fresh escalation in a case that Moneycontrol had first reported on May 15 last year — exactly one year prior — when it disclosed that SEBI was investigating the role of bank officials in insider trading in shares of the bank’s client companies.
According to sources cited in the Moneycontrol report, SEBI officials specifically questioned the process through which a clean chit was given to a former zonal head of IndusInd Bank who was allegedly involved in insider trading. The SEBI investigation team also sought recordings of the Audit Committee Board meeting in which the insider trading issue involving the concerned official was raised — but was later shelved based on the opinion of a former judge.
The underlying facts of the case, as established through two law firm enquiry reports, found that the former zonal head and other officials had allegedly engaged in insider trading in shares of client companies. IndusInd Bank’s compliance department had taken the view that the matter ought to be reported to SEBI in accordance with the regulator’s insider trading regulations and the bank’s own internal norms. However, management subsequently allowed the official concerned to leave the bank in March of last year — without the matter being reported to SEBI as the compliance department had recommended.
It is this gap — between the compliance department’s recommendation to report and the management’s decision to allow a quiet exit — that SEBI’s investigation is now focused on. The regulator’s interest in the Audit Committee meeting recordings suggests it is examining whether the shelving of the issue at board level was procedurally proper, and whether the bank’s handling of the matter constituted a failure to meet its disclosure and reporting obligations under SEBI’s Prohibition of Insider Trading Regulations, 2015.
The probe adds a fresh regulatory dimension to IndusInd Bank’s already troubled recent period, which has included accounting restatements related to its derivatives portfolio and significant management changes. SEBI’s renewed investigation into the insider trading matter — visiting the premises, seeking recordings, and questioning compliance officials — signals that the regulator is not satisfied with the bank’s internal handling of the case and is building an independent evidentiary record.
IndusInd Bank had not issued a public statement on the SEBI visit at the time of writing.
Disclaimer: This article is for informational purposes only and does not constitute investment advice. Please consult a SEBI-registered financial advisor before making investment decisions.