The market regulator (SEBI) on Monday dropped proceedings against 16 individuals in the Infosys insider trading case. The case came into the limelight after an alert was issued about possible insider trading in Infosys shares around July 2020, which coincided with the company’s results released for the quarter ended June 30, 2020.
SEBI investigated whether some individuals traded Infosys shares using unpublished price-sensitive information (UPSI), which is a violation of insider trading rules.
The market regulator found that 8 individuals violated these rules and an interim order was issued against them in 2021. However, two of them appealed the order before the Securities Appellate Tribunal (SAT) and it was dismissed.
The main issue in the case was whether Pranshu Bhutada, one of the noticees, had access to unpublished price-sensitive information (UPSI) about Infosys’ financial results.
Evidence of professional communication
Pranshu Bhutada had argued that the claim that he had stopped communicating with the other notice recipients (Sunil Kumar Dhareshwar) after January 7, 2020 was false. He had shown evidence of ongoing professional communication during 2020.
Further, he contested the allegation that he passed on unpublished price-sensitive information to Amit Bhutada, one of the notice recipients, noting that the SCN’s evidence relied on calls made before Sunil allegedly received access to UPSI and there were no other conversations around the trading period.
SEBI decision
For the quarter ended September 30, 2020, Pranshu said that a call on October 6, 2020 took place before Sunil received the UPSI and the financial results were finalised on October 10. He also referenced that the call was not related to UPSI but to a different issue.
SEBI found that the evidence did not sufficiently prove that Sunil had shared UPSI with Pranshu. Regular interactions between them did not substantiate UPSI transfers and there was no evidence of any special relationship or transactions that pointed to quid-pro-quo.
SEBI gave the benefit of the doubt to the accused and decided to quash the proceedings.
No clear evidence: SEBI
SEBI found that there was no clear evidence showing that one person had shared confidential information with another during the stipulated period. Since it was not proven that anyone had access to this confidential information, the relevant charges have been dropped.
SEBI has decided to lift the ban on the individuals involved and has closed the case. Any money taken from these individuals will be refunded with interest.
