IT services giant Infosys CEO Salil Parekh has settled charges of violating insider trading provisions and agreed to pay Rs 25 lakh for failing to put in place adequate controls to prevent this, said the Securities and Exchange Board of India (SEBI) on Thursday.
The High Level Advisory Committee (HPAC) “recommended settlement of the matter on payment of Rs 25,00,000/- (Rupees Twenty Five Lakh only). The recommendation of ACVL was accepted by the panel of full-time members of SEBI on May 21, 2024 and the notice of application was sent to the applicant via email dated May 24, 2024,” SEBI said.
He added that the “applicant” – in this case, Infosys CEO and MD Salil Parekh – informed the regulator in a letter dated June 7 that the amount had been remitted on June 7, and subsequently confirmed the receipt of it.
Meanwhile, Infosys shares were last seen up 0.30 per cent at Rs 1,545.95. The over-the-counter turnover stood at Rs 10.73 crore, giving a market capitalisation (m-cap) of Rs 6,41,862.25 crore.
SEBI said that after investigation, it found that between June 29, 2020 and September 27, 2021, Infosys had violated the provisions of the SEBI Act and the PIT Regulations, 2015. “During investigation, it « It was found that certain information which was Unpublished Price Sensitive Information (UPSI) had not been considered as such by Infosys, » it said.
SEBI said Parekh offered to settle the proceedings, without admitting or denying the charges, through a settlement order. Once the settlement money was received, the specified procedure was settled, SEBI said, as per the agreed terms.
INFOSYS INSIDER TRADING CASE
The case revolves around Infosys’ partnership with Vanguard in 2020. In the announcement, Vanguard is called the largest asset manager in the defined contribution space and said it would provide Vanguard with a platform cloud-based recordkeeping. “The investigation conducted by SEBI made particular reference to Infosys’ own analysis which identified the strategic importance of the partnership for the expansion of its own business and revenue; and concluded that the said partnership would result in expansion of Infosys’ businesses. The investigation concludes that the information relating to the strategic partnership was covered by Regulation 2(1)(n)(iv) of the definition of UPSI under the PIT Regulations, 2015,” the order said.
Under the standards, the CEO and Managing Director is responsible for “establishing an adequate and effective internal control system to ensure compliance and prevent insider trading.” Subsequently, a demand notice was issued to Infosys for violation of law, following which Parekh sought a solution through an out-of-court settlement.