Infosys Resolves Insider Trading Allegations With SEBI Through A Settlement Of Rs 25 Lakhs

Infosys Resolves Insider Trading Allegations With SEBI Through A Settlement Of Rs 25 Lakhs

The CEO of IT services giant Infosys, Salil Parekh, has resolved allegations of insider trading violations by agreeing to settle with a payment of Rs. 25 lakh, as announced by the Securities and Exchange Board of India (SEBI). This settlement pertains to inadequate controls to prevent such violations.

According to SEBI, the High Powered Advisory Committee (HPAC) recommended the case for settlement upon payment of Rs. 25 Lakhs. The recommendation of the HPAC was accepted by Panel of Whole Time Members of SEBI on May 21, 2024 and the Notice of Demand was issued to the Applicant vide e-mail dated May 24, 2024.

SEBI stated that Parekh had proposed to settle the proceedings, without admitting or denying the charges, through a settlement order. As the settlement money has been received, the specified proceedings have been disposed of, said SEBI, as per the terms agreed upon.

Upon investigation, SEBI found that during the period from June 29, 2020 to September 27, 2021, Infosys had violated provisions of the SEBI Act and PIT Regulations, 2015. “During the course of investigation, it was found that certain information which was Unpublished Price Sensitive Information (UPSI) had not been considered as such by Infosys,” the SEBI order stated.

The case relates to Infosys' collaboration with Vanguard in 2020. According to the announcement, describing Vanguard as the leading asset manager in the Defined Contribution Space, Infosys committed to delivering a cloud-based record-keeping platform to Vanguard.

Salil Parekh was the CEO and MD of Infosys at the time of announcement of strategic partnership between Infosys and Vanguard. The SEBI investigation concluded that he violated provisions of Regulations 9A(1) and 9A(2) of PIT Regulations 2015.

The SEBI investigation referred, among other things, to Infosys' internal analysis, which recognized the strategic significance of the partnership for expanding their business and revenue. It concluded that this partnership would indeed lead to business expansion for Infosys. The investigation determined that information concerning this strategic partnership fell under Regulation 2(1)(n)(iv) of the definition of Unpublished Price Sensitive Information (UPSI) under the PIT Regulations, 2015, as stated in the order.