Market regulator SEBI has intensified its investigation into an alleged insider trading case linked to IndusInd Bank, with scrutiny widening to former bank officials, internal compliance processes and members of the bank’s Audit Committee Board. The probe relates to allegations that confidential information about client companies may have been misused to trade in shares before such information became public.
Compliance Teams Questioned at Andheri Office
According to sources, officials from SEBI’s investigation department visited IndusInd Bank’s Andheri office earlier this week and questioned personnel from the compliance and secretarial departments. The regulator is examining how internal concerns over suspicious trading activity were handled within the bank.
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The investigation is focused on allegations involving a former zonal head of the bank, who was reportedly granted a clean chit despite concerns raised over trading activity. SEBI has sought access to recordings and documents related to Audit Committee Board meetings where the matter was allegedly discussed before being dropped.
Investigators are also reviewing whether the bank’s internal decision-making process complied with regulatory obligations under insider trading norms. The regulator is examining if the issue should have been escalated earlier under SEBI regulations and the bank’s own internal policy framework.
Internal Enquiry Reports Under Review
Sources said the bank had earlier appointed two separate law firms to conduct internal enquiries into the matter. These reports allegedly raised serious concerns about possible misuse of unpublished price sensitive information within the institution.
The compliance department was reportedly of the view that the findings should have been reported to SEBI. However, sources claimed that instead of formally escalating the matter, the then management allowed the concerned official to leave the bank in March last year without major disciplinary action.
The management and members of the Audit Committee later sought a legal opinion from a former judge. Based on that opinion, the matter was allegedly considered not serious enough to require reporting to SEBI.
Trades in Client Company Shares Examined
SEBI is now examining trades allegedly carried out by the former zonal head, family members and other associated individuals. The regulator is also probing the role of the then Audit Committee members, including its chairperson, to determine whether there was any effort to suppress or narrow the matter after the allegations surfaced internally.
The trades under scrutiny involved shares of several Kolkata-based companies, including Kesoram Industries, Birla Tyres, Eveready Industries and McLeod Russel. Investigators suspect that privileged access to sensitive information related to corporate accounts, stressed assets, debt settlements, restructuring and insolvency proceedings may have been misused for personal financial gain.
The case is separate from another insider trading matter involving the bank’s former top management, in which SEBI had earlier passed an interim order temporarily barring five senior officials from accessing or dealing in the securities market. The regulator has also sensitised senior management teams of major banks on strict compliance with insider trading rules, warning that misuse of non-public information undermines market fairness and investor confidence.
