Moneycontrol Be a Pro
Get App
Last Updated : Oct 23, 2019 08:43 PM IST | Source:

SEBI starts probe against Infosys over whistleblower charges

The regulator will seek clarifications from the company's management on the charges level against its CEO Salil Parekh.

Market regulator Securities and Exchange Board of India (SEBI) has started a probe into allegations by a whistleblower letter, which accused Infosys top management of serious accounting and corporate governance lapses, media reports said.

Moneycontrol first reported that the regulator was likely to take up the Infosys case.

The market regulator is also examining possible insider trading in the company's securities, CNBC-TV18 said.


Other charges against the company management also included non-disclosure of price-sensitive information by its management and some corporate governance lapses.

Stock exchanges have already been asked to collate trading data of Infosys' shares and derivative positions.

PTI reported that the regulator may also summon the company's top management and others. Information might be sought from some board committees including those dealing with audit and other financial matters at the company, depending on progress in the investigation.

If it is found that independent directors of the company did not press for timely disclosure and other necessary actions to be taken following the whistleblowers' complaint, their role might also come under the scanner.

Meanwhile, BSE on October 23 asked Infosys to explain why it did not disclose a whistleblower's complaint alleging "unethical practices" on the part of some of the company's top executives to shore up profits by means of irregular accounting.

On October 22, Infosys Chairman Nandan Nilekani said the whistleblower complaint dated September 20 had been placed before the audit committee on October 10. He added that here was an undated complaint that had also been placed before the committee.

One of the company's board members had received the complaints on September 30, according to Nilekani's statement submitted to the stock exchanges on October 22.

Nilekani had said that both the complaints were placed before the company's non-executive board members on October 11, also the day when Infosys announced its second quarter results.

Nilekani had also said the audit committee has retained law firm Shardul Amarchand Mangaldas & Co to conduct an independent investigation into the issue.

In the letter dated September 20 and signed by 'Ethical Employees', it was alleged that CEO Salil Parikh as well as Chief Financial Officer Nilanjan Roy engaged in forced revenue recognition from large contracts not adhering to accounting standards.

The letter, addressed to the board, claimed that recent big deal wins carried negligible margins and that Roy directed certain people to make wrong assumptions to show margins.

Shares of Infosys plunged over 16 per cent on Tuesday, wiping out Rs 53,450.92 crore from its market valuation. The scrip gained over one per cent on Wednesday on the BSE and the NSE.

Get access to India's fastest growing financial subscriptions service Moneycontrol Pro for as little as Rs 599 for first year. Use the code "GETPRO". Moneycontrol Pro offers you all the information you need for wealth creation including actionable investment ideas, independent research and insights & analysis For more information, check out the Moneycontrol website or mobile app.
First Published on Oct 23, 2019 07:50 pm
Follow us on
Available On