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Infosys Insider trading case | Experts say it's individual failure, company not at fault

In an order dated May 31, the market regulator Securities and Exchanges Board of India banned eight entities and individuals, including two Infosys employees, from selling and buying securities directly or indirectly until further notice. They were also fined Rs 3.06 crore.

June 01, 2021 / 07:56 PM IST
Shriram Subramanian, founder, InGovern Research Services, a proxy advisory firm, said,

Shriram Subramanian, founder, InGovern Research Services, a proxy advisory firm, said, "This looks like transgression of two senior employees.”

 
 
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Two Infosys employees were among the people and entities named in an insider trading case by market regulator Securities and Exchanges Board of India (SEBI).

Analysts and governance experts Moneycontrol spoke to, said that while this in an individual failure and that the company's governance systems continue to be robust, Infosys needs to emphasise and amplify its values to prevent such slippages in future.

SEBI order

In an order dated May 31, SEBI banned eight entities and individuals selling and buying securities directly or indirectly until further  notice. They were  also fined Rs 3.06 crore.

These include two Infosys employees - Pranshu Bhutra, Senior Corporate Counsel, and Venkata Subramaniam VV, Senior Principal, Corporate Accounting Group. The other parties in the case are Amit Bhutra and Bharath C Jain from Capital One Partners and Ankush Bhutra, Amit Bhutra, and Manish Champalal Jain from Tesora.

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Infosys did not respond Moneycontrol's query on the action it will take on the two employees. The story will be updated with their comments when received.

Company not at fault

Shriram Subramanian, founder, InGovern Research Services, a proxy advisory firm, said, "This looks like transgression of two senior employees.”

An analyst from domestic brokerage who tracks Infosys, in consent, said, "The company is not at fault and there is no lapse of governance here. This is the guilt of an individual."

Another analyst explained that Infosys’ disclosure standard and governance are outstanding and transparency is robust. “In an organisation with 2.5 lakh people, there will always be some who will not hold up to these standards. Infosys has to set an example by taking action against these employees and also keep re-emphasizing and communicating its values.”

But strengthening the systems will be equally important.

Strengthening the systems

"The company will have to strengthen its way of who has access to unpublished price sensitive information (UPSI) and sensitise people to the seriousness of it. They should also sensitise (employees) on violation of Prohibition of Insider Training (PIT) guidelines," Subramanian said.

As per SEBI guidelines, Unpublished Price sensitive Information (UPSI) refers to any information that concerns the company directly or indirectly, but is not meant for the disclosure to the larger public. The information is sensitive and can impact the stock market prices.

In this case, the two employees were able to access the UPSI and had shared the information with Capital One and Tesora partners, who had generated illegal gains of Rs 3.06 crore, which has been levied as fine by the SEBI, the order read.
Swathi Moorthy
Chandra R Srikanth is Editor- Tech, Startups, and New Economy
first published: Jun 1, 2021 07:56 pm

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