SEBI Drops Insider Trading Case Against 16 Persons In Infosys Probe

The Securities and Exchange Board of India quashed proceedings against sixteen individuals on Monday in the Infosys insider trading case.

The case initially arose from alerts about potential insider trading in Infosys shares around July 2020, coinciding with the company's announcement of its financial results for the quarter ending June 30, 2020.

SEBI investigated whether certain individuals traded Infosys shares using unpublished price-sensitive information, violating insider trading regulations. It found that eight individuals breached these rules and issued an interim order against them in 2021. However, two of them appealed the order before the Securities Appellate Tribunal and got it dismissed.

The central issue was whether Pranshu Bhutra, one of the noticees, had access to unpublished price-sensitive information (UPSI) about Infosys's financial results.

Pranshu Bhutra argued that the claim he stopped communicating with Sunil Kumar Dhareshwar, the other noticee, after Jan. 7, 2020, was incorrect. He showed evidence of ongoing professional communication throughout 2020.

Additionally, he contested the allegation that he passed UPSI to Amit Bhutra, one of the noticees, noting that the evidence mentioned in the show cause notice relied on calls made before Sunil allegedly had access to the UPSI and no further communication around the trading period.

For the quarter ending Sept. 30, 2020, Pranshu pointed out that a call on Oct. 6, 2020, occurred before Sunil was said to have received UPSI, and the financial results were only finalised on Oct. 10. He provided context that the call was related to an unrelated issue, not UPSI.

SEBI found that the evidence did not sufficiently prove that Sunil shared UPSI with Pranshu. The regular communication between them did not confirm UPSI transfer, and there was no evidence of a special relationship or transactions suggesting a quid-pro-quo. Consequently, SEBI extended the benefit of the doubt to the accused and decided to quash the proceedings.

SEBI found that there was no clear evidence showing that one person shared confidential information with another during the relevant time. Since it wasn't proven that anyone had access to this confidential information, the related accusations were dropped.

As a result, SEBI decided to remove the restrictions on the individuals involved and ended the case. Any money held from these individuals will be returned with interest.