Infosys Settles Insider Trading Charges with SEBI, Paying 25 Lakh Fine

SEBI Allows Greater Overseas Investments; Permits 100% Aggregate Contribution In FPIs For NRIs

SUMMARY

Infosys CEO Salil Parekh settles SEBI insider trading charges with INR 25 lakh fine, related to 2020 Vanguard partnership.

SEBI found Infosys violated regulations by misclassifying Unpublished Price Sensitive Information between June 2020 and September 2021.

Meanwhile, SEBI set to vote on new regulations for unregistered financial influencers ("finfluencers") at its upcoming board meeting today.

Infosys CEO Salil Parekh has settled charges of insider trading violations with the Securities and Exchange Board of India by agreeing to pay a fine of INR 25 Lakh (around $30,000).

The High Powered Advisory Committee (HPAC) recommended the settlement, which was accepted by SEBI’s Panel of Whole Time Members on May 21, 2024. The payment was made on June 7, and SEBI confirmed receipt of the amount, as per the markets regulator.

Reuters reported the development first.

The case stems from SEBI’s probe which found that Infosys violated provisions of the SEBI Act and Prohibition of Insider Trading (PIT) Regulations, 2015, between June 29, 2020, and September 27, 2021.

The investigation found that Infosys had not appropriately classified certain information as Unpublished Price Sensitive Information (UPSI).

As CEO and MD, Parekh was responsible for implementing effective systems of internal control to ensure compliance and prevent insider trading. The settlement does not imply an admission of guilt, as Parekh proposed to settle the proceedings without admitting or denying the charges.

The insider trading case is linked to Infosys’ partnership with Vanguard in 2020. SEBI’s investigation revealed that Infosys had recognised the strategic importance of this partnership for its business expansion and revenue growth. The information regarding the partnership was deemed UPSI under the PIT Regulations, 2015.

This comes at a time when SEBI is set to vote on new regulations for unregistered financial influencers (“finfluencers”) at its board meeting today. The proposed rules aim to curb unregistered finfluencers’ revenue models, prohibit SEBI-regulated entities from engaging with them, and require registered finfluencers to display credentials.

Meanwhile, Infosys continues to make strides in artificial intelligence. At the company’s 43rd annual general meeting on June 26, Chairman Nandan Nilekani announced that Infosys is working on 225 generative AI programs for its clients and has trained over 2.5 lakh employees in GenAI technologies.

The company has also filed more than 46 AI patents and 70 AI client advocacies in FY24, positioning itself at the forefront of the AI revolution in the enterprise space.