A tribunal ruling has revealed that India’s market regulator collected a vast archive of internal emails from IndusInd Bank as part of an ongoing insider trading investigation, underscoring the scale of digital evidence now shaping financial market probes.
SEBI’s Insider Trading Probe Uncovers Massive Email Archive
India’s market regulator, the Securities and Exchange Board of India, has gathered a massive 1.7-terabyte collection of internal emails from officials at IndusInd Bank as part of an ongoing insider trading investigation, according to details that surfaced in an order issued by the Securities Appellate Tribunal.
The existence of the large email archive emerged during proceedings involving Arun Khurana, a former executive of the bank, who had approached the tribunal seeking access to the entire dataset relied upon by the regulator in building its case.
The tribunal dismissed Khurana’s request for full disclosure, ruling that since the investigation remains underway and no show-cause notice has yet been issued, the regulator is only obligated to provide documents that were relied upon in issuing its interim order.
The development highlights the increasingly data-intensive nature of modern securities investigations, where regulators often rely on extensive digital communication records to examine trading activity and internal decision-making.
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Tribunal Declines Request for Complete Disclosure
The tribunal bench, led by Justice P. S. Dinesh Kumar, held that Khurana was not entitled to access the entire set of investigative material at the present stage of the proceedings. In its order, the tribunal noted that the case had not yet reached the adjudication stage and therefore the request for full disclosure of all collected evidence could not be granted.
Khurana had been asked to appear before SEBI officials on December 30 for a personal hearing. Prior to that appearance, he moved the tribunal seeking inspection of documents gathered by the regulator during the investigation. Among the materials requested were the 1.7-terabyte email dataset obtained from the bank, internal regulatory notes and approvals relating to the probe, and attachments connected to internal email communications.
His counsel argued that denying access to these materials violated principles of natural justice. According to the submission, the regulator had relied on only selected emails to arrive at certain conclusions that resulted in an interim order against him.
SEBI opposed the request, stating that the email archive was extremely large and contained confidential information. The regulator said the email searches had been conducted using keyword filters and that only the relevant communications relied upon in the case had been shared with Khurana.
Tribunal Says Relevant Documents Already Provided
In reviewing the submissions, the tribunal observed that Khurana had already been supplied with all emails and materials relied upon by the regulator in its interim findings.
The order noted that Khurana had argued that SEBI examined only selected emails before issuing an ex-parte interim order. However, the tribunal stated that the documents used by the regulator had already been made available to him, allowing him the opportunity to respond to the allegations and explain why the relied-upon documents might not justify the interim action.
The tribunal reiterated a settled legal position: individuals facing regulatory action become entitled to full access to relevant material only at the stage of adjudication. Since the investigation has not reached that stage, the bench concluded that Khurana’s request for access to the entire dataset did not merit consideration.
Investigation Linked to IndusInd Bank Derivatives Disclosure
The underlying investigation stems from a sharp fall in IndusInd Bank shares after the bank disclosed discrepancies in the accounting of its derivatives portfolio. The bank revealed on March 10, 2025, that an internal review had uncovered accounting inconsistencies related to its derivatives book. According to the bank, the issue could have an adverse financial impact of around ₹1,529 crore—roughly 2.35 percent of its net worth as of December 2024.
Following the disclosure, SEBI initiated a suo motu preliminary examination into the decline in the bank’s share price. During the probe, the regulator received complaints and media reports alleging that certain senior officials of the bank might have engaged in insider trading. Based on the material examined during the investigation, SEBI concluded that Khurana and four others qualified as “insiders” under the regulator’s insider trading regulations and had allegedly traded while in possession of unpublished price-sensitive information.
Acting on those findings, SEBI Whole Time Member Kamlesh Chandra Varshney issued an ex-parte interim order on May 28, 2025. The order impounded ₹14.39 crore that the regulator said was linked to unlawful gains and barred Khurana from accessing the securities market.
Khurana later challenged that interim order before the tribunal. In his appeal, he argued that SEBI had incorrectly assumed that the unpublished price-sensitive information came into existence on December 4, 2023. According to him, the bank’s disclosure indicated that the information surfaced only around March 2025.
He further maintained that his trading activity occurred between December 8, 2023 and June 25, 2024, largely through the exercise of employee stock options. Khurana said he exercised ESOPs for 91,520 shares at an average price of ₹1,539 per share and argued that if he had known about adverse information, he would not have exercised the options at prices above the prevailing market level. For now, the tribunal’s order leaves the broader investigation in the hands of SEBI, with the question of full evidence disclosure expected to arise only if the matter proceeds to formal adjudication.
