Sebi bans IndusInd Bank former CEO, 4 others from securities mkt for insider trading
New Delhi, May 28 (PTI): Markets regulator Sebi on Wednesday barred former CEO of IndusInd Bank, Sumant Kathpalia, and four other senior officials from accessing the securities markets in connection with an alleged insider trading in the bank's shares.
In addition to the market ban, Sebi has impounded Rs 19.78 crore collectively from the five individuals, according to an interim order passed by the regulator.
The other officials of IndusInd Bank Ltd (IBL) restrained by Sebi are Arun Khurana, who was Executive Director and Deputy CEO at the time of the alleged violation; Sushant Sourav, Head, Treasury Operations; Rohan Jathanna, Head, GMG Operations; and Anil Marco Rao, Chief Administrative Officer (CAO), Consumer Banking Operations.
These senior executives allegedly traded in IndusInd Bank shares while in possession of unpublished price-sensitive information (UPSI) related to discrepancies in account balances of the bank's derivative portfolio. By doing so, they violated insider trading regulations.
"During the preliminary examination conducted by Sebi, on the basis of the evidence collected so far, it is prima facie seen that all noticees traded in the scrip being aware of the UPSI related to the discrepancies and averted/avoided huge losses," the regulator said in its 32-page order.
The case originated from a Master Direction issued by the Reserve Bank of India (RBI), which had a significant operational and financial impact on IndusInd Bank.
Sebi noted that the internal team of the bank was aware of the financial implications due to discrepancies in the derivative portfolio and had already begun calculating the impact internally.
A preliminary examination revealed that an email dated November 30, 2023, was sent by the Head, Accounts, of the bank to certain employees. This communication cited a figure of Rs 1,749.98 crore as the estimated impact of discrepancies in the derivative portfolio.
Further, during the preliminary examination, it is prima facie seen that members of the senior management of IBL including noticees (five officials) were aware of the UPSI related to discrepancies and they had kept constant supervision upon the same.
The evidence analysed during the preliminary examination revealed that Noticees traded in the scrip of IBL while being insider, Sebi said.
Sebi noted that emails dated December 6, 7, and 8, 2023, referenced a discrepancy of around Rs 1,362 crore, with the final figure of Rs 1,572 crore communicated to certain employees on December 11, 2023.
The examination also revealed that figures regarding the discrepancies were not only being tracked internally but were also being prepared for submission to the RBI. Emails circulated on December 16, 2023, March 6, 2024, and May 5, 2024, indicated discrepancy figures of Rs 1,572 crore, Rs 1,776.49 crore, and Rs 2,361.69 crore for the quarters ended September 2023, December 2023, and March 2024, respectively.
However, this information was only disclosed to the public via stock exchange filings on March 10, 2025, Sebi noted.
It was also noted that senior management insisted on getting these figures validated externally. Accordingly, KPMG was appointed in January 2024, to review the discrepancies identified by the internal team. The preliminary examination revealed that KPMG submitted a figure of Rs 2,093 crore as the negative impact from the discrepancies, covering data till December 31, 2023.
In its order, Sebi noted that noticee nos. 1 to 5 (five officials) traded in the scrip of IBL while being insider and accordingly barred them "from buying, selling or dealing in securities, either directly or indirectly, in any manner whatsoever, until further orders."
On April 29, CEO Kathpalia and Deputy CEO Khurana resigned from the bank. Following their exit, the IndusInd Bank Board appointed a Committee of Executives to oversee daily operations until a new MD & CEO takes charge or for a period of three months, whichever is earlier.
The fraud-hit private sector lender earlier this month reported a Rs 2,329 crore loss for the March quarter, its worst performance ever, as the interim management opted to go for a deep-clean exercise beyond recognising the impact of wrong accounting practices.
In the March quarter, the bank took impact of all the irregularities brought to the notice, including a Rs 1,960 crore hit from incorrect recognition of derivative trades, cumulative interest income reversal of Rs 674 crore due to incorrect accounting, disclosed a Rs 172 crore fraud where employees had led it to incorrectly classify the amount as fee income under the microfinance business, set off Rs 595 crore of incorrect manual entries posted as "Other Assets" and "Other Liabilities" in the past, and also recognized the higher slippages.
The internal audit report of the bank revealed "involvement of senior Bank officials, including former Key Management Personnel (KMP), in overriding key internal controls". The bank reported the likely involvement of senior management in the accounting fraud to the Central Government.
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Actress sexual assault: Court says Prosecution 'miserably' failed to prove conspiracy against Dileep
Kochi (PTI): The prosecution had "miserably" failed to prove the conspiracy charge against Dileep in the sensational 2017 actress sexual assault case, a local court has observed while citing inconsistencies and lack of sufficient evidence against the Malayalam star.
The full judgement of Ernakulam District and Principal Sessions Court Judge Honey M Varghese was released late on Friday, and has revealed the judge also pointing out at unsustainable arguments put forth by the prosecution.
"The prosecution miserably failed to prove the conspiracy between accused No.1 (Pulsar Suni) and accused No.8 (Dileep) in executing the offence against the victim," the court held.
It examined in detail, the prosecution's allegation that Dileep had hired the prime accused to sexually assault the survivor and record visuals, including close-up footage of a gold ring she was wearing, to establish her identity.
On page 1130 of the judgment, under paragraph 703, the court framed the issue as whether the prosecution's contention that NS Sunil (Pulsar Suni) recorded visuals of the gold ring worn by the victim at the time of the occurrence, so as to clearly disclose her identity, was sustainable.
The prosecution contended Dileep and Suni had planned the recording so that the actress' identity would be unmistakable, with the video of the gold ring intended to convince Dileep that the visuals were genuine.
However, the court noted that this contention was not stated in the first charge sheet and was introduced only in the second one.
As part of this claim, a gold ring was seized after the victim produced it before the police.
The court observed that multiple statements of the victim were recorded from February 18, 2017, following the incident, and that she first raised allegations against Dileep only on June 3, 2017.
Even on that day, nothing was mentioned about filming of the ring as claimed by the prosecution, the court said.
The prosecution failed to explain why the victim did not disclose this fact at the earliest available opportunities.
It further noted that although the victim had viewed the sexual assault visuals twice, she did not mention any specific recording of the gold ring on those occasions, which remained unexplained.
The court also examined the approvers' statements.
One approver told the magistrate that Dileep had instructed Pulsar Suni to record the victim's wedding ring.
The court observed that no such wedding ring was available with her at that time.
During the trial, the approver changed his version, the court said.
The Special Public Prosecutor put a leading question to the approver on whether Dileep had instructed the recording of the ring, after which he deposed that the instruction was to record it to prove the victim's identity.
The court observed that the approver changed his account to corroborate the victim's evidence.
When the same question was put to another approver, he repeated the claim during the trial but admitted he had never stated this fact before the investigating officer.
The court noted that the second approver even went to the extent of claiming Dileep had instructed the execution of the crime as the victim's engagement was over.
This showed that the evidence of the second approver regarding the shooting of the ring was untrue, as her engagement had taken place after the crime.
The court further observed that the visuals themselves clearly revealed the victim's identity and that there was no need to capture images of the ring to establish identity.
In paragraph 887, the court examined the alleged motive behind the crime and noted that in the first charge sheet, the prosecution had claimed that accused persons 1 to 6 had kidnapped the victim with the common intention of capturing nude visuals to extort money by threatening to circulate them and there was no mention about Dileep's role in it.
The court also rejected the prosecution's claim that the accused had been planning the assault on Dileep's instructions since 2013, noting that the allegation was not supported by reliable evidence.
It similarly ruled out the claim that Suni attempted to sexually assault the victim in Goa in January 2017, stating that witness statements showed no such misconduct when he served as the driver of the vehicle used by the actress there.
The court also discussed various controversies that followed Dileep's arrest and the evidence relied upon by the prosecution, ultimately finding that the case had not been proved.
Pronouning its verdict on the sensational case on December 8, the court acquitted Dileep and three others.
Later, the court sentenced six accused, including the prime accused Suni, to 20 years' rigorous imprisonment.
The assault on the multilingual actress, after the accused allegedly forced their way into her car and held it under their control for two hours on February 17, 2017, had shocked Kerala.
Pulsar Suni sexually assaulted the actress and video recorded the act with the help of the other convicted persons in the moving car.
