Another Case Of Insider Trading In Infosys Shares
In an interim order, the market regulator has barred two individuals from the securities market for violating insider-trading regulations.
Ramit Chaudhri, Infosys Ltd.’s former head of solution design, communicated unpublished price-sensitive information to Keyur Maniar, who traded on the basis of it, according to an order by the Securities and Exchange Board of India.
Chaudhri is currently employed as corporate vice president at WNS; and Maniar is a senior vice president and country head at Wipro Ltd., according to Securities and Exchange Board of India’s order.
"We're in receipt of the interim ex parte order issued by the Securities and Exchange Board of India in the matter of insider trading relating to shares of Infosys Ltd.," Wipro said in response to BloombergQuint's request for a comment. "Effective Sept. 28, 2021, Keyur Maniar is not an employee of Wipro Ltd."
Infosys and WNS are yet to respond to BloombergQuint’s query. Chaudhri and Maniar couldn’t be reached for a comment immediately.
SEBI’s investigation was prompted by insider trading alerts for Infosys’ shares. In its order, the regulator noted:
June 29, 2020: Infosys sent a presentation to select employees saying the go-to-market command center to start working with Vanguard.
July 14, 2020: Infosys made a corporate announcement of strategic partnership with Vanguard, which impacted its stock price positively.
Chaudhri was involved in the Vanguard deal and was reasonably expected to have access to UPSI prior to the public announcement.
Infosys and Wipro were the final contenders for the Vanguard deal. And the designated person at Wipro for it was Maniar.
Chaudhri connected with Maniar frequently over phone and they had both worked together in Wipro BPS for two years. Basis this, Maniar was reasonably accepted to have access to UPSI. Prior to the announcement, he traded in Infosys’ scrip in the F&O segment and squared off his positions after that.
Due to this trading, Maniar had generated proceeds of Rs 2.62 crore. His trading pattern three months before and after the Infosys trade was almost 0%.
SEBI’s insider-trading regulations require the board of every company to maintain a structured digital database. This is supposed to reflect names of all individuals with whom UPSI is shared.
Infosys told SEBI that the information on this transaction was not part of its SDD since the partnership with Vanguard was not UPSI.
The market regulator rejected Infosys’ submission, saying:
The company placed big emphasis on the Vanguard deal in its earnings call.
The deal was being referred to as the largest deal signed in Infosys' history which would propel revenue growth for its financial services vertical.
After the deal was announced, Infosys' stock rose 6.09% in one trading day. Corresponding increase in Nifty Index was only 0.10% and Sensex 0.05%.
“...whether an information is an “UPSI” needs to be determined on the basis of the parameters mentioned in the PIT Regulations and not on the basis of whether such information has been recorded in the SDD. Reflection in SDD only gives an additional circumstance to be considered for an UPSI, in that the company has also recorded the information as UPSI.” - SEBI Order
"On September 28, Infosys was informed of an interim ex-parte SEBI Order. In this order, a former Infosys BPM employee and another third party, have been named in an ongoing insider trading investigation", Infosys said in an email statement to BloombergQuint. "The company is not a party in this matter. Infosys and our group companies have a well-defined Code of Conduct covering all its employees and an Insider Trading Policy that governs dealing with unpublished price sensitive information".
SEBI has barred Chaudhri and Maniar from the market. They have been directed to jointly or severally pay Rs 2.62 crore within 15 days.
This is the second such order by SEBI this year. In June, the regulator had passed interim directions against two Infosys employees for engaging in insider-trading activities.
(Updated to reflect Wipro and Infosys statement)