Infosys CEO settles Indian regulator’s charge of lacking controls to prevent insider trading

9:22 am Thursday, June 27th, 2024

By Sai Ishwarbharath B and Haripriya Suresh

BENGALURU (Reuters) -Infosys CEO Salil Parekh settled charges for failing to place adequate internal controls to prevent insider trading at India’s No.2 IT services exporter during a 2020 contract, the country’s markets regulator said on Thursday.

Parekh agreed to pay 2.5 million rupees (around $30,000) to settle the markets regulator’s charge, which was related to a contract for Infosys to provide U.S. financial firm Vanguard with a cloud-based record-keeping platform.

Infosys publicly disclosed the deal in 2020, but the Securities and Exchange Board of India (SEBI) said “certain information which was unpublished price sensitive information (UPSI) had not been considered as such by Infosys”.

The regulator did not elaborate on what this information was but held Parekh accountable for what it considered a lapse in internal controls to prevent insider trading on that deal.

The order would not impact its financial, operational or any other activities, Infosys said in a statement, which did not contain any further details on the charges.

Infosys has since drafted an internal policy to identify unpublished price-sensitive information and seek approval from its board and audit committee, SEBI order said.

It has also started providing a break-up of the total contract value of any deal in terms of average revenue per annum for comparison with its annual revenue.

“SEBI is making an example of Infosys and holding its CEO accountable,” said Shriram Subramanian, founder of proxy advisory firm InGovern Research Services.

The order will put all companies on notice as to what they consider and label as UPSI in their internal compliance systems, he said.

Bengaluru-based Infosys’ shares closed about 2% higher on the day amid a broad-based rally in Indian equities.

($1 = 83.5070 Indian rupees)

(Reporting by Sai Ishwarbharath B and Haripriya Suresh in Bengaluru; Additional reporting by Nandan Mandayam; Editing by Savio D’Souza)