SEBI Conducts Searches in Insider Trading Probe Linked to Former IndusInd Bank Executive: Report
New Delhi: The Securities and Exchange Board of India (SEBI) carried out search-and-seizure operations in Kolkata and nearby locations on May 23 and 24 as part of an investigation into alleged insider trading linked to IndusInd Bank, MoneyControl reported.
The searches covered residential and commercial premises linked with Samir Agarwal, former zonal head of commercial banking at the bank, as well as members of his family and relatives, the report said.
The latest SEBI action adds to a series of controversies surrounding IndusInd Bank.
Earlier this year, The Wire reported allegations that a purported October 2024 Asset-Liability Committee meeting was used to retrospectively justify changes in the accounting treatment of six derivative trades, resulting in a Rs 153-crore increase in reported net interest income for the December 2024 quarter. The bank has said it reported the accounting matter as fraud to the RBI, filed complaints with law enforcement agencies and initiated proceedings to fix staff accountability.
The Wire's report was the first to identify Samir Agarwal and cite extracts from the internal vigilance report, minutes of the audit committee on the investigation and the email communication between the chairperson of the audit committee requesting to not disclose the insider trading to SEBI and the stock exchanges.
Vigilance inquiry
The investigation follows an internal vigilance inquiry initiated after a whistleblower complaint. The inquiry allegedly found that Agarwal traded in shares of companies that were clients of the bank using information obtained through his role.
An examination of Agarwal’s trading activity as well as that of his family members revealed 17 companies, in which they traded, that were also part of Agarwal’s loan portfolio. According to the report, Agarwal's wife purchased 34.55 lakh shares valued at Rs 38.44 crore and later sold them for a profit of Rs 3.26 crore using unpublished price-sensitive information concerning Kesoram Industries Ltd.
Agarwal acknowledged that the trades were made on his advice and had not been disclosed to the bank, the report said.
According to the report, demat account records of Agarwal's wife, father and mother showed share purchases worth Rs 816 crore and gains of Rs 53.15 crore – 68% of those gains came from companies connected to his loan portfolio.
The vigilance inquiry alleged that Agarwal carried out cash-based share and derivatives trades outside official records, provided trading advice to associates, relatives and executives of borrower companies, and traded in entities under his professional coverage.
The report alleged that between August 2023-March 2024, Agarwal acquired shares worth Rs 343.21 crore through a third-party broker and earned net gains of Rs 10.33 crore, with 73% of those gains linked to companies in his loan portfolio. It also referred to alleged futures and options trades involving Vedanta Ltd shares and futures contracts linked to IndusInd Bank shares.
According to the report, a law firm consulted by the bank recommended that the matter be referred to SEBI. However, the bank's management subsequently sought an opinion from a former judge and decided that no further escalation was required.
The matter is separate from another insider trading investigation involving IndusInd Bank's senior management. In that case, SEBI issued an interim order in May last year barring five senior executives, including the then managing director and chief executive officer and the deputy chief executive officer, from participating in the securities market, the report said.
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