The Securities and Exchange Board of India (Sebi) directive named Infosys executives Pranshu Bhutra and Venkata Subramaniam VV, besides other individuals and entities. The probe pertains to trades made last year by the entities concerned.
The globally tracked software bellwether said it would also start an internal probe.
“On June 1, Infosys was informed of an interim ex-parte Sebi order where two of its employees, among other third parties, have been named in an ongoing insider-trading investigation,” Infosys said in a statement after the order. “The company will extend full cooperation as required to Sebi, Additionally, as a result of the order, an internal investigation is being initiated and appropriate action will be taken on the conclusion of such investigation.”
Illegal trading gains of Rs 3.06 crore are to be impounded, Sebi said in its order. Besides the two Infosys executives mentioned above, the other individuals and entities barred are Amit Bhutra, Bharath C Jain, Manish Champalal, Ankush Bhutra, Capital One Partners and Tesora Capital.
Sebi said that based on an extract of the structured digital database related to the financial results of Infosys for the quarter ended June 30, 2020, the UPSI (unpublished price sensitive information) came into existence on June 29.
The UPSI period was from June 29 to July 15. The corporate announcement of the financial results was made to the stock exchanges on July 15.
The regulator alleged Capital One and Tesora had traded in the shares of Infosys in the F&O segment just prior to the earnings announcement. Soon after, these entities offloaded their positions such that net positions were zero.
Both Amit and Bharath had placed orders on behalf of Capital One, while Amit had placed orders on behalf of Tesora. Thus, Capital One and Tesora had traded in Infosys in the F&O segment while in possession of UPSI, Sebi said.
“It is observed that Capital One and Tesora had significant trading activity in the scrip of Infosys during the weeks adjacent / close to the dates of corporate announcement of financial results for the quarters ended December 2019, March 2020, June 2020 and September 2020,” Sebi said in its order.
“The trading concentration of Capital One and Tesora in the scrip of Infosys had increased drastically during the said weeks, “ Sebi said.
“Thus, Capital One and Tesora have the same repetitive pattern of trading in the scrip of Infosys during periods close to the announcement of financial results,” Sebi added.
The regulator alleged that Venkata Subramaniam VV, senior principal, corporate accounting group, has communicated UPSI to senior corporate counsel Pranshu Bhutra. They communicated frequently, wherein Pranshu Bhutra procured inside information from Venkata Subramaniam. So, both violated insider trading norms, Sebi said.
It added that Amit Bhutra procured inside information from Pranshu Bhutra. Bharath Jain and Amit Bhutra are partners of Capital One Partners. Amit Bhutra, Ankush Bhutra and Manish Champalal Jain are working partners of Tesora.
“The directions are preventive in nature as Venkata Subramaniam VV (designated person of Infosys) and Pranshu Bhutra continue to be employed with Infosys and have access to ongoing UPSIs. There is an impending danger to investors that in future they might communicate/misutilise the unpublished price-sensitive information pertaining to Infosys,” Sebi whole-time member Madhabi Puri Buch said in her 55-page order.