Mumbai: The Securities and Exchange Board of India (SEBI) has barred eight entities, including individuals and two financial companies, for being involved in insider trading in the scrip of Infosys.
The entities are Pranshu Bhutra, Amit Bhutra, Bharath C. Jain, Manish C. Jain, Ankush Bhutra, Venkata Subramaniam V.V., and firms Capital One Partners and Tesora Capital.
The investigation found that the total proceeds generated from insider trading was over Rs 3.06 crore.
The SEBI has directed the impounding of the bank accounts of those involved and also asked them to create an escrow account jointly and severally and deposit the impounded amount in that account within 15 days from the order.
Pranshu Bhutra, a Senior Corporate Counsel of Infosys, being an officer or employee of the software major, is a connected person and was reasonably expected to have access to the UPSI (unpublished price-sensitive information) and on preponderance of probability basis, he was in possession of the UPSI, the order said.
Amit Bhutra and Bharath C. Jain are working partners of Capital One, while, as per a partnership deed of Tesora Capital, Amit Bhutra, Ankush Bhutra and Manish C. Jain are working partners of Tesora.
As per the SEBI order, Capital One Partners and Tesora Capital had made illegal gains of Rs 2.79 crore and Rs 26.82 lakh, respectively, by indulging in insider trading while in possession of UPSI, pertaining to the corporate announcement of audited financial results for the quarter ended June 30, 2020 made by Infosys.
"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," said the order dated May 31.
Amit Bhutra and Bharath Jain had both had placed orders on behalf of Capital One and Amit Bhutra had also placed orders on behalf of Tesora.
"Capital One and Tesora had traded in the scrip of INFY in F&O segment while in possession of UPSI," said the capital market regulator.
SEBI said that, separately, Venkata Subramaniam V.V., a Senior Principal, Corporate Accounting Group of Infosys, has been identified as a designated person by the company for the purpose of the UPSI.
The regulator noted that he had been in frequent communication with Pranshu Bhutra through professional relationship as both are employees of Infosys, and had telephonic communication during the UPSI period.
"Pranshu is also reasonably expected to have access to the UPSI through Venkata and on preponderance of probability basis he was in possession of the UPSI. Therefore, in addition to being a connected person as mentioned in para 4.4, by virtue of this additional connection also, Pranshu is a connected person, and thereby an insider."
The order copy said that on a preponderance of probability basis, Venkata Subramaniam had communicated the UPSI to Pranshu Bhutra and Pranshu Bhutra had procured UPSI from Venkata Subramaniam, and thereby, both had prime facie violated the provision of SEBI Act and PIT Regulations.
Sonam Chandwani, Managing Partner at K.S. Legal & Associates, said: "The Securities and Exchange Board of India (SEBI) has struck again, barring eight from trading or dealing in securities. Considering the eight entities were deemed to be in possession of undisclosed price-sensitive information, the order was issued in breach of the Prohibition of Insider Trading Regulation."
"It's worth noting that the order was properly issued, based on the assumption that the stocks were exchanged based on knowledge and information rather than unpublished price-sensitive information. The regulator has issued such directives in the past, demonstrating that it is committed to maintaining trading market openness," she said.