The case pertains to a 2020 partnership announcement between Infosys and US-based global asset manager Vanguard, under which the IT firm would provide a cloud-based record-keeping platform to Vanguard. The partnership should have been treated as unpublished price sensitive information (UPSI), as per Sebi rules. However, Infosys failed to do so. Parekh was the CEO and MD of Infosys at the time of the partnership announcement.
According to SEBI Prohibition of Insider Trading (PIT) Regulations, 2015, “unpublished price sensitive information” means any information, relating to a company or its securities, directly or indirectly, that is not generally available which upon becoming generally available, is likely to materially affect the price of the securities…
The Sebi order says the CEO, MD or such other analogous person of a listed company is responsible for putting in place an adequate and effective system of internal control to ensure compliance to prevent insider trading. The market regulator conducted an investigation and issued a show-cause notice to Infosys in August 2023. Following that, the company filed for a consent settlement plea, “wherein the applicant proposed to SEBI to settle the instant proceedings, without admitting or denying the findings of fact and conclusions of law, through a settlement order.”
The application by Infosys was approved by Sebi’s High Powered Advisory Committee (HPAC), which noted that applicant has submitted an undertaking that the practice followed within the company to identify UPSI has been placed before the audit committee and board for guidance and approval.“The practice of breaking the total contract value of any deal into average revenue per annum for comparison with the annual revenue of Infosys has also been informed to the Audit Committee and Board of Infosys,” the applicant said in its application. The practice has been converted into a written and approved policy.
