SEBI Finds Top Legal Counsel Of Infosys Prima Facie Guilty Of Insider Trading

Discussion in 'Must-Read Interviews, Articles & News Items' started by Arjun, Jun 1, 2021.

  1. Arjun

    Arjun Chief Executive Officer (CEO) Staff Member

    Joined:
    Mar 19, 2015
    Messages:
    91
    Likes Received:
    17
    Securities and Exchange Board of India (“SEBI”) has a sophisticated alert system which helps it to nail down insider trading activities.

    In the latest episode, there was alleged insider trading in the scrip of Infosys Limited (“INFY”) for the period around July 15, 2020 i.e. around the corporate announcement of audited financial results of INFY for the quarter ended June 30, 2020 made to BSE and NSE.

    According to a detailed interim order dated 31st May 2021, SEBI has alleged that Pranshu Bhutra, the Senior Corporate Counsel of INFY, disclosed unpublished price sensitive information to certain persons / entities which enabled them to trade in the said scrip.

    [​IMG]

    This is a serious contravention of the provisions of the Securities and Exchange Board of India Act, 1992 read with the SEBI (Prohibition of Insider Trading) Regulations, 2015.

    The others who have been implicated in the alleged insider trading case are Amit Bhutra and Bharath C. Jain.

    Amit Bhutra and Bharath C. Jain are partners of Capital One Partners.

    They are also working partners of a firm named Tesora.

    Capital One and Tesora had traded in the scrip of INFY in the F&O segment just prior to announcement of financial results for the quarter ended June 30, 2020 and soon after the announcement, subsequently offloaded / squared off their positions such that net positions were zero.

    Amit and Bharath, both had placed orders / given trading instructions on behalf of Capital One. Amit had placed orders / given trading instructions on behalf of Tesora. Thus, Capital One and Tesora had traded in the scrip of INFY in F&O segment while in possession of UPSI.

    It is also noted that UPSI period is from June 29, 2020 to July 15, 2020. Capital One traded significantly in INFY from July 10, 2020. Tesora traded significantly in INFY from July 13, 2020.

    SEBI obtained Call Data Records and KYC documents of Pranshu, Amit and Bharath from Telecom providers.

    The call records show that prior to July 10, 2020 (the date from which Capital One started trading in INFY), frequent telephonic communication happened between Amit and Pranshu on 7 occasions, out of which the largest duration call (297 second) was made on July 09, 2020.

    From the CDRs of mobile numbers of Amit and Bharath, prima facie it is noted on July 08, 2020 and July 09, 2020 (i.e. prior to the start of trading by Capital One) there were long duration calls of 661 second and 295 second respectively, between Amit and Bharath.

    SEBI also found that as per bank statement of Axis Bank account of Pranshu Bhutra, in the month of June 2020, Pranshu has transferred a combined amount of approx. Rs. 1.1 crores to Mahrishi on four separate occasions i.e. June 06, 07, 09 and 11, 2020 and on July 09, 2020 transferred Rs. 5 lakh to Maharish.

    The alleged insider trading transactions were very profitable.

    Capital One has taken a net long position in the scrip of INFY for 2,76,000 shares in Futures between July 10, 2020 and July 14, 2020 at an average price of Rs.794.67 and thereafter the entire aforesaid long position was squared off between July 15, 2020 to July 16, 2020 (i.e., from the date of announcement on July 15, 2020) at an average price of Rs.893.15 thereby earning a net profit of Rs.271.81 lakhs (squared off difference) from the aforesaid transactions.

    Capital One has also sold put options for 27,600 shares, 36,000 shares and 60,000 shares at strike prices of Rs.740, Rs. 750 and Rs.760 respectively between July 14, 2020 to July 15, 2020 (i.e. before the corporate announcement) and squared off the aforesaid positions between July 20, 2020 and July 21, 2020 thereby earning a net profit of Rs.7.70 lakhs (squared off difference) from the aforesaid transactions.

    Capital One has earned a cumulative net profit of Rs.279.51 lakhs (squared off difference) from all the aforesaid positions.

    Ultimately, SEBI has frozen the bank and demat accounts of the noticees until further investigation is conducted.

    Click here to read the entire order of SEBI

    [​IMG]

    Madhabi Puri Buch, the distinguished WTD of SEBI, who passed the order
     
    Last edited: Jun 1, 2021
Loading...