SEBI bars IndusInd Bank ex-CEO, 4 others from trading in securities market
SEBI says there will be “no debits” from accounts in banks held by Kathpalia and the four other officials without its permission
Former IndusInd Bank CEO Sumant Kathpalia, along with four other senior officials of the organisation, was barred from trading in the securities market by the Securities and Exchange Board of India (Sebi) on Wednesday (May 28) on the ground of alleged insider trading, which resulted into accounting discrepancy worth over Rs 3,000 crore.
Insider trading
According to the order posted on SEBI's official website, the market regulatory body stated that Kathpalia, along with Arun Khurana (former executive director and deputy CEO), Sushant Sourav (head of Treasury operations), Rohan Jathanna (head of GMG operations), and Anil Marco Rao (chief administrative officer for consumer banking operations), traded in shares of the IndusInd Bank despite having access to unpublished price sensitive information (UPSI), a clear violation of insider trading rules.
"These Noticees have already resigned from their respective positions in IBL (IndusInd Bank Limited) as per Exchange filing," stated the order.
Also Read: Lokpal gives SEBI ex-chief Madhabi Buch clean chit, calls charges ‘presumptions’
What SEBI’s order says
“All the Noticees, viz. Noticee Nos. 1 to 5 are hereby restrained from buying, selling or dealing in securities, either directly or indirectly, in any manner whatsoever, until further orders,” stated the interim order by SEBI.
It further stated that there will be “no debits” from accounts in banks where Kathpalia and the four other officials are holding accounts without SEBI’s permission.
“Depositories shall also be directed that no debit shall be made, without permission of SEBI, in respect of the demat accounts held by Noticees. However, credits, if any, into the accounts may be allowed,” stated the order.
Also Read: IndusInd accounting mismatch: SEBI's response vastly better than RBI's
‘Egregious violations’
The order came days after SEBI Chairman Tuhin Kanta Pandey’s remark that the regulatory body was probing "egregious violations" by senior management of IndusInd Bank.
The report further stated that IndusInd Bank had been rocked with accounting frauds of about a whooping Rs 3,400 crore.
The alleged irregularities came to SEBI’s notice after the stocks of IndusInd Bank nosedived on March 10, following its disclosure of discrepancies in the accounting of its derivatives portfolio, stated the report.
Also Read: Who is Tuhin Kanta Pandey, the new SEBI chief who replaced Madhabi Puri Buch?
It came to SEBI’s notice that the senior management of the bank was aware of the issue uncovered by an internal review after the implementation of the Master Direction by the Reserve Bank of India on derivative accounting.
“From the above-mentioned emails, it can be prima facie inferred that the MD & CEO was aware of the probable huge impact of the discrepancy in the account balances of the derivative portfolio,” Sebi noted.