New Delhi

In a crucial decision, the Securities and Exchange Board of India (SEBI) has lifted the restrictions imposed on employees of Infosys and connected entities. This move comes after the regulator vacated earlier directions issued through an interim order and a confirmatory order in 2021, which were based on allegations of insider trading.

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Background and context

The restrictions had been in place since 2021, following allegations of insider trading involving Infosys employees and connected entities. These allegations cast a shadow over the professional standing of the individuals involved, creating uncertainty and speculation within the financial community. However, with the final order dated September 9, 2024, SEBI has decisively disposed of the proceedings against all noticees without any further direction, effectively rejecting the earlier allegations as explained in a recent report by Live Mint.

On 15 September 2021, SEBI upheld its interim order of 31 May 2021, barring six entities—Pranshu Bhutra, Amit Bhutra, Bharath C. Jain, Capital One Partners, Tesora Capital, and Venkata Subramaniam V.—from trading in the company’s securities.

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Pranshu Bhutra and Subramaniam held senior positions at Infosys. SEBI also investigated the trading activity of Capital One and Tesora Capital, both partnership entities. Subsequently, in May 2022, the Securities Appellate Tribunal (SAT) lifted the restrictions on the noticees. However, Sebi continued its investigation into the allegations and later, issued the final order on September 9 i.e., Monday.

Importance, history, and the role of SEBI

The Securities and Exchange Board of India (SEBI) is the regulatory body for the securities and commodity market in India under the administrative domain of Ministry of Finance within the Government of India. It was established on 12 April 1988 as an executive body and was given statutory powers on 30 January 1992 through the SEBI Act, 1992.

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The SEBI's decision is multifaceted, with several key implications:

According to SEBI, the evidence on record was insufficient to support the allegations against Pranshu and Amit Bhutra, leading to the dismissal of the allegations against all noticees.

“I hereby direct that the restraint imposed on noticees 2 to 7 through interim order read with the confirmatory order shall stand vacated with immediate effect. The instant proceedings against all noticees are disposed of without any direction,” SEBI's whole-time member Ashwani Bhatia said.

The allegations were that the entities traded in Infosys futures and options just before the announcement of financial results for the quarter ended 30 June 2020. According to SEBI, the unpublished price-sensitive information (UPSI) period spanned 29 June to 15 July 2020.

In its final order, however, SEBI stated that its investigation had failed to establish any evidence of calls exchanged between Venkat and Sunil during the UPSI period for the quarter ended 30 June 2022.