Infosys CEO, Salil Parekh fined ₹25 lakh by SEBI to settle insider trading charges

Infosys’ Chief Executive Officer Salil Parekh has settled insider trading charges and paid a fine of ₹25 lakh to the Securities and Exchange Board of India (SEBI), the company said today. On September 27, 2021, SEBI passed an ad Interim Ex Parte Order against two entities for prima facie violation of the SEBI Act and SEBI (Prohibition of Insider Trading) Regulations, 2015 in the case of alleged insider trading in Infosys. SEBI passed the confirmatory order on December 13. 2021.

SEBI reported that it investigated to ascertain if the two entities violated the SEBI regulations from June 29, 2020, to September 27, 2021. In July 2020, Infosys announced a strategic partnership with Vanguard to provide it with a cloud-based record-keeping platform.

SEBI classifies information about partnerships and major deals as Unpublished Price Sensitive Information (UPSI) as it may have a significant impact on the stock price. However, Infosys did not consider the strategic partnership with Vanguard as USPI despite Infosys’ own analysis identifying the strategic importance of the partnership.

Following the investigation, a show-cause notice was issued to Salil Parekh on August 3, 2023. The Infosys CEO filed a settlement application to settle the case without admitting or denying the findings and conclusions of the probe.

The settlement application was put before the High Powered Advisory Committee (HPAC) on March 4, 2024. After reviewing the facts of the case and the settlement terms, HPAC recommended the settlement of the case upon the payment of ₹25 lakh.

Salil Parekh also submitted an undertaking that Infosys’ practice to identify USPI has been placed before the Audit Committee and Board of Infosys for guidance and approval. Additionally, steps have been taken in terms of the practice of breaking the Total Contract Value of any deal into average revenue per annum for comparison with the annual revenue of Infosys.

Shares of the company have risen by nearly 1% since the beginning of the year. The stock has gained over 21% in the last one year.