IT services giant Infosys’ CEO Salil Parekh has settled charges of violating provisions of insider trading and agreed to pay Rs 25 lakh for failing to have adequate controls to prevent the same, the Securities and Exchange Board of India (SEBI) said on Thursday.
The High Powered Advisory Committee (HPAC) “recommended the case for settlement upon payment of Rs 25,00,000/-(Rupees Twenty Five Lakh only). The recommendation of the HPAC was accepted by Panel of Whole Time Members of SEBI on May 21, 2024 and the Notice of Demand was issued to the Applicant vide e-mail dated May 24, 2024”, said SEBI.
It added that the “applicant” – in this case Infosys CEO and MD Salil Parekh – in a mail on June 7 informed the regulator that the amount was remitted on June 7, and thereafter confirmed the receipt of the same.
Meanwhile, Infosys shares were last seen trading 0.30 per cent higher at Rs 1,545.95. Turnover on the counter came at Rs 10.73 crore, commanding a market capitalisation (m-cap) of Rs 6,41,862.25 crore.
SEBI said that upon investigation, it found that in the period from June 29, 2020 to September 27, 2021, Infosys had violated provisions of the SEBI Act and PIT Regulations, 2015. “During the course of investigation, it was found that certain information which was Unpublished Price Sensitive Information (UPSI) had not been considered as such by Infosys,” it said.
SEBI stated that Parekh had proposed to settle the proceedings, without admitting or denying the charges, through a settlement order. As the settlement money has been received, the specified proceedings have been disposed of, said SEBI, as per the terms agreed upon.
INFOSYS INSIDER TRADING CASE
The case revolves around Infosys’ partnership with Vanguard in 2020. In the announcement, it terming Vanguard as the largest asset manager in the Defined Contribution Space said that it would provide a cloud-based record keeping platform to Vanguard. “The investigation by SEBI inter-alia referred to Infosys’ own analysis that identified the strategic importance of the partnership for the expansion of their own business and revenue; and concluded that the said partnership would result into expansion of business for Infosys. The investigation concludes that the information related to the strategic partnership was covered under Regulation 2(1)(n)(iv) of the definition of UPSI under the PIT Regulations, 2015,” the order stated.
As per the norms, the CEO, MD is responsible “for putting in place adequate and effective system of internal control to ensure compliance for preventing insider trading”. Subsequently a show cause notice was sent to Infosys for its violation, after which Parekh sought a way out through settlement.