Financial Crime World

SEBI Probes Infosys: Eight Employees Allegedly Involved in Rs 3 Crore Insider Trading Scam

New Delhi, May 8 — The Securities and Exchange Board of India (SEBI) is investigating a case of insider trading against eight Infosys employees, who allegedly made profits worth approximately Rs 3 crore by sharing confidential information with each other.

Infosys Employees under Scrutiny

According to reports, this insidious activity reportedly occurred between 2018 and 2020. The employees traded in Infosys shares based on information exchanged with their colleagues, thereby flouting SEBI’s (Prohibition of Insider Trading) Regulations, 2015.

  • Eight employees under investigation
  • Alleged activity took place between 2018 and 2020
  • Shared confidential information to trade in company shares
  • Violated SEBI’s (Prohibition of Insider Trading) Regulations, 2015

SEBI and Infosys have declined to disclose the names or designations of the employees.

Previous Scandals

Infosys is no stranger to insider trading controversies. In 2018, the company’s former Executive Vice President from the Greater China division was arrested on insider trading allegations following a probe by the American Federal Bureau of Investigation (FBI).

  • Previous scandal involving the former Executive Vice President from Greater China
  • Arrested on insider trading allegations
  • Investigation carried out by the FBI
  • Infosys faced backlash and reputational damage

Infosys argued that the accused had been terminated once the illegal activities were uncovered.

ongoing investigation

SEBI has seized the call and email records of the employees to amass critical evidence against them. The investigation is ongoing with no definite timeline for completion.

Impacts on Infosys

The insider trading probe comes at a time when Infosys is already battling a decline in profit growth and a slump in its share price. Their Q4 FY24 results, released earlier this year, exhibited a marginal revenue increase accompanied by a steep decrease in net profit.

  • Amidst profit decline and weak share price
  • Sharp dip in net profit in Q4 FY24
  • Insider trading investigation adds to challenges

Infosys’ shares experienced a marginal loss today as concerns surrounding the investigation mounted. The stock has witnessed a 10% decrease in value over the past twelve months.

Consequences of Insider Trading

Insider trading allegations, proven, carry stringent penalties under Indian corporate laws, including heavy fines, trading restrictions, and even imprisonment.

  • Potential heavy penalties for insider trading
  • Fines, trading restrictions, and imprisonment

The Need for Stronger Regulation and Enforcement

The latest SEBI investigation casts a shadow on the occurrence of insider trading practices in India’s corporate sector and emphasizes the importance of stricter regulation and enforcement measures to eradicate such illicit activities.

  • Insider trading in India’s corporate sector highlighted
  • Demonstrates the need for stronger regulation and enforcement measures.

Infosys is one of India’s leading IT services and consulting companies with a workforce exceeding 200,000 employees and an international clientele. It was co-founded in 1981 by N.R. Narayana Murthy, S.Gopalakrishnan, D.N.Rose, and S.Bajaj.