Infosys begins probe into two employees involved in insider trading case

Bengaluru based information technology (IT) services firm Infosys on Tuesday said it has initiated an internal investigation after markets regulator Securities and Exchange Board of India (SEBI) barred two of its employees from trading in the public markets on charges of insider trading.  

Infosys employees under investigation are Pranshu Bhutra, senior corporate counsel, and Venkata Subramaniam, senior principal, corporate accounting group. 

In a statement to the Bombay Stock Exchange, Infosys said it was informed of an interim ex-parte SEBI order on June 1. 

“The company will extend full cooperation as required to SEBI on the matter. Additionally, as a result of the order, an internal investigation is being initiated and appropriate action will be taken on conclusion of such investigation,” Infosys said in the statement. 

In its order, SEBI had banned eight parties from selling or buying securities directly or indirectly until further notice.  

The eight entities had traded in the scrip of Infosys while in possession of Unpublished Price Sensitive Information (UPSI) related to the company’s financial results for the quarter ended June 30, 2020, according to an interim order by the regulator on Monday. 

“There is ample prima facie evidence which demonstrates that entities have been in violation of SEBI Act and Prohibition of Insider Trading  (PIT) Regulations. This has not only violated the integrity of the market but also prima facie resulted in undue benefit to them over general investors" the SEBI order said. 

In its investigation, SEBI found that Pranshu Bhutra was connected to an individual named Amit Bhutra through frequent telephonic conversations. According to SEBI, Pranshu had a fund transaction with Mahrishi Alloys Private Limited (Mahrishi) and soon thereafter Mahrishi had a fund transaction with Shyama Devi Bhutra (Amit’s mother) and Ram Bilas Bhutra ( Pranshu’s father). 

“Further, long duration call between Subramaniam and Pranshu on July 02, 2020 (i.e. few days after the UPSI came into existence) and on July 09, 2020 (i.e. one day prior to the start of trading by Capital One), prima facie leads to the conclusion on preponderance of probability basis, that Subramaniam, who was in possession of the UPSI, had prima facie communicated the UPSI to Pranshu in some form or manner. Hence, Subramaniam has prima facie violated the provision of Section 12A(e) of SEBI Act, 1992 and Regulation 3(1) of PIT Regulations,” the SEBI order said. 

The markets regulator has ordered for an immediate action to protect the investors and the securities market from further harm.