Bank of America allegedly shared non-public information with investors in India: WSJ Report

According to the report, investment bankers contacted investors through WhatsApp to share transaction details before the stake sale was announced in India.

Bank of America is probing allegations of insider trading in its Asian operations, where bankers allegedly leaked nonpublic information to investors ahead of major stock sales worth hundreds of millions of dollars, The Wall Street Journal reported, citing whistleblower complaints.

The report further stated that Bank of America has opened an internal investigation after the whistleblower complaint was made in June.

The complaint alleged that bankers shared transaction details with investors before a stock sale in India was announced this spring, according to a copy of the complaint reviewed by The Wall Street Journal — potentially enabling the investors to engage “front-running”.

The report further stated that the complaint was also shared with the markets regulator Securities and Exchange Board of India (Sebi) and the head of investment banking for Bank of America in Asia back in June.

Front-running is an illegal practice, where an entity trade based on advanced information from a stockbroker or analyst before the information has been made available to clients.

According to the report, investment bankers contacted investors through WhatsApp to share transaction details before the stake sale was announced in India. It further alleged that the stake sale in question was worth $200 million and related to an arm of the Aditya Birla Group and Aditya Birla Sun Life AMC.

Similar practices for other companies raised by whistleblowers included around $500 million IPO for SoftBank-backed FirstCry and a $300 million rights offering for PNB Housing Finance.

The WSJ report also alleged that company records showed that ahead of the $200 million public sale of stock for Aditya Birla Sun Life AMC, the investment bankers conducted meetings with investors including quantitative-trading firm Jane Street, Norges Bank and life-insurance company HDFC Life.

The stake sale was made public of March 18 and executed around March 20.

On March 18, Aditya Birla Capital and Sun Life (India) AMC Investments—the promoters of the fund house, had approved a stake sale of 2.01 crore shares, making up 7 percent equity in the company.

The stake sale also came with the option to offload another 1.28 crore shares, representing a 4.47 percent equity. Through the oversubscription option, the promoters aimed to unload 11.47 percent equity in the AMC company.

Meanwhile, Bank of America refuted the claims as a report by Reuters stated that a spokesperson told it had found no evidence to support these claims.

“We take complaints seriously and thoroughly investigate them,” the spokesperson said. “In instances where we conclude there has been inappropriate behaviour, we take disciplinary action.”