Daijiworld Media Network - Mumbai
Mumbai, May 19: India's markets watchdog SEBI has launched a probe into six senior officials of IndusInd Bank over suspected insider trading, sources familiar with the matter revealed.
The officials are being investigated for allegedly selling employee stock options while being aware of serious accounting lapses at the bank well before the information was made public. The investigation, still at a preliminary stage, is scrutinizing the timing of these trades to determine possible violations of SEBI norms and the bank's internal code of conduct.
According to sources, no show cause notices have been issued yet, as SEBI continues to gather evidence. The regulator has requested a forensic report prepared by audit firm Grant Thornton, which earlier flagged questionable trading by two bank executives before the disclosure of financial irregularities.
The bank had in March admitted to a $230 million discrepancy in its books due to years of incorrect accounting of internal derivative trades. The revelation came amid growing concerns over corporate governance, leading to the resignations of CEO Sumant Kathpalia and deputy Arun Khurana last month.
Sources indicated that the regulator is also pressing the bank to explain why the disclosure of these lapses was delayed, despite management reportedly being informed as early as September 2024.
Encashing stock options while in possession of unpublished price-sensitive information is considered a violation under SEBI rules and may result in penalties, trading bans, or claw-backs of bonuses and stock options.
Both IndusInd Bank and SEBI have declined to comment on the matter.