Marketing consultant Rama Bijapurkar, who resigned as an independent director of ICICI Bank last week and now reportedly faces an insider trading probe, said the purchase of the lender’s shares against the rules was due to an “inadvertent error.”
“It was an inadvertent error, which I disclosed to the company as soon as I became aware of it,” Bijapurkar told Moneycontrol on January 24 in response to a set of questions. “I confirm that I am complying with all requirements pertaining to this.”
Market regulator Securities and Exchange Board of India (Sebi) is probing the trades of Bijapurkar to see if she violated insider trading rules, The Economic Times reported.
Bijapurkar’s independent financial adviser purchased 4,900 equity shares of ICICI Bank in her account on January 5 “without prior intimation to her” when the trading window for company insiders was closed, ICICI Bank told the stock exchanges on January 22, a day before her resignation became effective.
Resignation from the Board
Bijapurkar, who advises companies on market strategy and consumer behaviour, resigned from the ICICI Bank board effective January 23, citing a likely conflict of interest between her position on the board and her professional activities and associations with financial services companies.
“I have recently been given to understand by management that my teaching activity in the area of market and business strategy at an educational institution with which I am associated and my research activities on India’s consumer economy at a not-for-profit research centre with which I am associated, which may require me to occasionally engage with other financial service companies or the investor community, could be in violation of the conflict of interest policy of the Bank and the regulator—even in the event of no direct remuneration being earned,” Bijapurkar said in her resignation letter dated January 20.
“In order to avoid any possible ambiguity on my position at any future date as a result of these activities, I have decided to step down,” Bijapurkar said in the letter.
Bijapurkar made no mention of the shares purchased when the trading window for company insiders was closed.
“I want to confirm that there is no other material reason for my resignation other than the one mentioned above,” Bijapurkar said in the letter.
“That is exactly factual too,” Bijapurkar told Moneycontrol, without elaborating.
In its stock exchange notification, ICICI Bank cited Bijapurkar’s letter to assert that there was no other material reason for her resignation.
“Ms. Bijapurkar in her letter has also confirmed that there is no other material reason for her resignation other than the one mentioned in the resignation letter,” ICICI Bank said in the notification dated January 21.
ICICI Bank referred to the purchase of shares only in a subsequent exchange filing on January 22. The bank said it fined Bijapurkar Rs 2 lakh.
When contacted on why ICICI Bank took more than two weeks to inform exchanges about Bijapurkar’s January 5 purchase of shares, a spokesperson said the bank could do so only after its audit committee met on January 22.
Sebi’s insider trading rules bar people in possession of price-sensitive information from trading—and benefitting—in a company’s shares when the trading window is closed for insiders ahead of quarterly results. This list includes independent directors.
ICICI Bank reported better-than-expected earnings on January 22.
Suhail Nathani, managing partner, economic laws practice, said the Prohibition of Insider Trading regulations have a presumption of guilt for trades that are done outside of the trading window.
“This is not the first time that a transgression like this has been found where a portfolio manager’s act has become a breach by the director. The question that begs consideration is whether for independent directors, some threshold or safe harbour can be prescribed under the regulations,” Nathani said.
Who is Bijapurkar?
Bijapurkar is a well-known independent consultant on market strategy, according to her website.
She is also an independent director on the boards of Nestle India, Sun Pharmaceutical Industries, Apollo Hospitals Enterprise, Mahindra & Mahindra Financial Services, Cummins India and VST Industries, ICICI Bank said in its notification to the stock exchanges.
She has also served on the governing councils of the Banking Codes and Standards Board of India, Insurance Information Bureau, and Indian Institute of Management Ahmedabad, and is on the eminent person advisory group to the Competition Commission of India.
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