SEBI Bans Former IndusInd Bank CEO and Executives for Insider Trading in Derivatives Case

International International News

Posted by NewAdmin on 2025-05-29 08:53:42 |

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On May 28, 2025, the Securities and Exchange Board of India (SEBI) issued an interim order banning five senior executives of IndusInd Bank, including former Chief Executive Officer Sumant Kathpalia and former Deputy CEO Arun Khurana, from participating in the securities market. The order is part of an ongoing investigation into alleged insider trading activities involving unpublished price-sensitive information (UPSI) related to accounting discrepancies within the bank’s derivatives portfolio.

SEBI’s investigation found that these top executives were aware of the accounting irregularities as early as December 2023 but chose not to disclose this material information to the public until March 2025. During this undisclosed window, the accused executives reportedly sold substantial shares of IndusInd Bank, allegedly using their privileged knowledge to avoid personal losses. The regulator estimates that these transactions helped the individuals avoid losses of around ₹19.78 crore. SEBI has frozen this amount through a provisional order and intends to take further action pending the completion of its inquiry.

In addition to Kathpalia and Khurana, the SEBI order also names Sushant Sourav, Head of Treasury Operations; Rohan Jathanna, Head of Global Markets Group Operations; and Anil Marco Rao, Chief Administrative Officer of Consumer Banking. These executives are alleged to have been part of internal discussions that acknowledged the financial discrepancies and their potential impact on the bank's financial performance, yet they delayed public disclosure. This concealment, according to SEBI, led to a significant fall in IndusInd Bank’s share price once the information was finally disclosed, thereby hurting retail and institutional investors who were unaware of the underlying issues.

The regulatory action is considered a landmark in SEBI’s continued efforts to ensure corporate accountability and market transparency. By barring senior executives from trading and impounding gains earned through alleged misuse of insider information, SEBI has reiterated its commitment to enforcing strict penalties for violations of securities laws. The order serves as a strong reminder to corporate India about the responsibilities of executives to uphold fair practices, especially when dealing with sensitive financial information that could influence investor decisions.

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