Indian markets regulator Securities and Exchanges Board of India (SEBI) has banned an Infosys and Wipro employee from trading in stock exchanges for insider trading in Infosys.
In an order dated September 27, the regulator named two employees Ramit Chaudhri and Keyur Maniar, during the corporate announcement of Infosys’ Vanguard Deal in July 2020.
Earlier on June 1, 2021, SEBI had fined two Infosys employees, and six entities and individuals for insider trading before the company's financial results announcement for the quarter ending June 2020. The company had initiated a probe into insider trading complaints and said that appropriate action will be taken on employees post the completion of the probe.
"We are in receipt of the interim ex parte order issued by the Securities and Exchange Board of India in the matter of insider trading relating to shares of Infosys Ltd. Effective September 28, 2021, Keyur Maniar is not an employee of Wipro Ltd," Wipro said in a statement.
"On September 28, Infosys was informed of an interim ex-parte SEBI Order. In this Order, a former Infosys BPM employee and another third party, have been named in an ongoing insider trading investigation," Infosys said in a statement to Moneycontrol.
The company further said that it has a well-defined Code of Conduct covering all its employees and an Insider Trading Policy that governs dealing with unpublished price sensitive information. "Infosys maintains strong policies and procedures reflecting its commitment to the highest level of compliance, integrity, and ethical business practices in all jurisdictions in which it operates, and will extend full cooperation as required to SEBI on the matter," the company added.
Vanguard deal: Insider trading
Chaudhri was a Solutions Design head at Infosys and was directly or indirectly involved in the Vanguard deal, which was pegged at $1.5 billion, and was in possession of unpublished price sensitive information (UPSI). the report said. According to Chaudhri's LinkedIn profile, he had quit Infosys in April 2021.
UPSI refers to the information about the company, which is not available in the public domain, and could have a significant impact on the prices of company’s securities in the stock market. The information could be related to financial results, dividends, change in capital structure, mergers and acquisitions, and key managerial personnel.
Using UPSI for trading is punishable under SEBI’s Prohibition of Insider Trading Act.
According to the order, Chaudhri with the possession of UPSI was in touch with Maniar, a Wipro employee, through telephonic conversation. Before the announcement of the deal on July 14, 2020, Maniar had traded Infosys' scrips and offloaded them soon after the announcement earning him Rs 2.6 crore through the trading.
Such trading behaviour was not normal and hence the duo has violated the SEBI's Prohibition of Insider Trading Act 2015, the order said.
"Chaudhri and Maniar are restrained from buying, selling and dealing in securities, either directly or indirectly, in any manner whatsoever until further orders," the order read.
In addition, both of them are now directed to provide a full inventory of their assets held in their name, including demat accounts, mutual fund details and other information, no later than 5 working days. The order, SEBI said, will be sent to Infosys and Wipro for necessary action.Note: The story has been updated with statements from Infosys and Wipro.