The Securities and Exchange Board of India (Sebi) is investigating six senior officials at IndusInd Bank for possible insider trading. The market regulator is examining whether these officials sold stock options while in possession of information related to undisclosed accounting lapses at the bank, before this information was made public, according to a report by Reuters.
Sebi is reviewing the timing of trades executed by these six officials to assess whether these transactions breached securities laws or the bank’s internal code of conduct. Since the investigation is still in its early stages, neither the people nor the bank have been yet issued with official show-cause warnings.
Advertisement
Earlier this month, Reuters had reported that a forensic review by audit and advisory firm Grant Thornton had found that at least two senior executives at IndusInd Bank had traded shares while they were aware of significant accounting irregularities. The bank had also disclosed in March 2025 that errors in accounting for internal derivative transactions over multiple years had caused a $230 million gap in its $60.8 billion balance sheet.
Following the disclosure, the bank’s CEO Sumant Kathpalia and Deputy CEO Arun Khurana had stepped down last month.
What Constitutes Sebi’s Violation
Utilising employee stock options when holding unpublished price-sensitive information is considered a violation under Sebi rules. Though there haven't been any criminal convictions for insider trading in India yet, there may be civil and criminal penalties. Typically, Sebi imposes fines and trading limitations as part of its regulatory sanctions.
Advertisement
Under the bank’s internal policies, proven violations could also result in clawbacks of bonuses and employee stock options. Also, Sebi has reportedly asked IndusInd Bank to provide an explanation for the delay in making the accounting errors public which senior management allegedly knew of as early as September 2024 or even earlier.
