The Securities and Exchange Board of India (Sebi) is investigating whether six officials at IndusInd Bank engaged in insider trading by selling stock options before accounting issues at the bank became public, says a report.
Sebi is reviewing the timing of these trades to determine if they violated regulatory norms or the bank’s internal code of conduct, according to sources cited in a Reuters report. The probe aims to establish whether the officials breached any laws by leveraging non-public information for personal gain
An audit report by Grant Thornton had earlier said two former officials of IndusInd Bank were allegedly involved in insider trading during a period when the bank faced accounting lapses in its derivative portfolio.
On April 29, weeks after IndusInd Bank disclosed accounting lapses and losses of nearly Rs 2,000 crore in its derivatives portfolio that triggered a rout in its shares, the bank’s Managing Director & CEO Sumant Kathpalia resigned with immediate effect. IndusInd Bank had earlier announced the resignation of deputy CEO Arun Khurana.
Kathpalia and Khurana sold shares worth Rs 157 crore in 2023 and 2024, according to data from the Bombay Stock Exchange (BSE). The data reveals that Kathpalia sold approximately 950,000 shares, valued at Rs 134 crore, between May 24, 2023, and June 25, 2024. During the same period, he purchased 396,000 shares worth Rs 34 crore. Similarly, Khurana sold 550,000 shares for Rs 82 crore over 2023-24, while acquiring 238,000 shares worth Rs 25 crore.
Sebi did not respond to a mail on the issue from The Indian Express.
While the bank initially sought to shift the blame to the Reserve Bank of India’s change in rules relating to the derivative portfolio and the loss from the derivative book remained unresolved for a long time, leading to the accumulation of losses, subsequent inspection by the central bank and external auditing firms found that the top brass did not act on time to limit the losses and clean up the mess.
On March 11, 2025, when the bank revealed a potential 2.35 per cent adverse impact on its net worth after an internal review of its derivative portfolio, the lender’s shares crashed by 27 per cent on the stock exchanges. The stock closed Rs 244 down at Rs 655.95 on the BSE on that day. Its share closed at Rs 784.05 on the BSE on Monday.
