SEBI Launches Probe into Insider Trading and Accounting Irregularities at IndusInd Bank
IndusInd Bank Share: IndusInd Bank, a private sector lender, faces mounting challenges. The Securities and Exchange Board of India (SEBI) is investigating potential insider trading by senior bank officials. SEBI has requested information from the bank regarding transactions made by five of its senior executives. The regulator is examining whether these officials possessed undisclosed material non-public information. SEBI is also assessing whether the bank violated disclosure regulations.
Investigation into Accounting Irregularities Continues
IndusInd Bank is under scrutiny not only for insider trading but also for accounting irregularities. The bank recently admitted to accounting errors in its currency derivatives booking, dating back approximately six years, with a potential impact of up to $175 million. To thoroughly investigate this matter, the bank has appointed Grant Thornton to assess whether there is any indication of fraud or internal lapses.
Potential Changes in Bank Management
On March 7th, IndusInd Bank informed stock exchanges that the Reserve Bank of India (RBI) had extended the term of its Managing Director (MD) and Chief Executive Officer (CEO), Sumant Kathpalia, for one year, until March 23rd, 2026. However, the bank's subsequent disclosure on March 10th regarding accounting irregularities, with an estimated impact of approximately 2.35% on its net worth, necessitating provisioning of ₹1600 crore (approximately $194 million USD), has fueled speculation about management changes.
Sharp Decline in IndusInd Bank Shares
IndusInd Bank shares have witnessed a decline of over 38% in the past month. As of 10:00 AM on Thursday, the bank's shares were trading at ₹648.95 per share on the NSE, reflecting a decrease of ₹6.35 or 0.97%. Over the past six months, the bank's share price has fallen by 55%. The 52-week high for the bank's share was ₹1,576.
What is Insider Trading?
Insider trading involves trading a company's securities based on material non-public information. This is unethical and illegal as it provides unfair advantage to certain investors, creating market inequality. SEBI closely monitors such activities and takes strict action against offenders.
