SEBI Probes Six IndusInd Bank Officials in Insider Trading Allegation

According to a Reuters report, the Securities and Exchange Board of India (SEBI) is examining trades made by 6 IndusInd Bank officials to determine whether they sold stock options while aware of internal accounting issues that had not yet been disclosed to the public. The regulator is looking into whether these trades violated insider trading rules or the bank’s internal code of conduct.

As of 1:49 PM on May 20, IndusInd Bank Ltd share price was at ₹785.50, a 0.18% increase, but down 19.97% over the past 6 months and 44.15% over the past year.

Preliminary Stage of Investigation

According to a Reuters report, the probe is currently in the early stages. No show-cause notices have been sent to the individuals or the bank. The names of the officials under investigation have not been made public.

Grant Thornton Audit Findings

The investigation follows a forensic audit by Grant Thornton, which found that 2 executives sold shares while they were aware of accounting discrepancies. These trades reportedly took place before any public announcement was made. SEBI has asked the bank to submit a copy of this audit report.

$230 Million Balance Sheet Gap

In March 2025, IndusInd Bank disclosed that it had incorrectly accounted for internal derivative trades over multiple years. This resulted in a $230 million shortfall in the bank’s balance sheet, which totals $60.8 billion. Following the disclosure, Chief Executive Officer Sumant Kathpalia and Deputy CEO Arun Khurana resigned in April.

SEBI Rules and Internal Policies

Selling stock while in possession of unpublished price-sensitive information (UPSI) is considered a breach of SEBI regulations. Insider trading can lead to civil penalties and sanctions, including market bans, although no criminal convictions have been reported in India so far. The bank’s internal policies also allow for clawbacks of bonuses and stock options in such cases.

Read more: IndusInd Bank to Review Insider Trading Allegations After Forensic Audit

Disclosure Timeline Under Review

SEBI is also examining when the management first became aware of the accounting issues. According to news reports, the bank’s top leadership may have known about the discrepancies as early as September 2024. The regulator has asked for an explanation regarding the delay in public disclosure.

Conclusion

The case remains under investigation, with no final actions taken yet. While insider trading in India is subject to both civil and criminal prosecution, there have been no instances of criminal convictions for this offence. The SEBI predominantly enforces regulations through civil actions, resulting in financial penalties or sanctions like temporary market prohibitions.

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