Regulator: Wipro and Infosys execs not off the hook for insider trading

Trader said he was just betting on COVID-induced digitalization, but investigation suggests otherwise


Tech execs from Infosys and Wipro have been denied complete reversal of Securities and Exchange Board of India (SEBI) directions resulting from insider trading accusations.

The confirmatory order [PDF] addressed an Interim Order from September 2021 that prohibited Ramit Chaudhari and Keyur Maniar from accessing the securities market and impounded 2.6m Indian Rupees ($350,000).

The actions were taken after the pair were investigated for insider trading of Infosys stock.

Maniar, a Wipro employee, had started selling stocks the very day after an internal announcement, made to a subset of Infosys, revealed that Vanguard had chosen to partner with the company in a deal that would eventually send the stock soaring.

Maniar had almost no trading history the nine months prior to the transaction that earned him $350,000. Automated systems at SEBI therefore detected suspicious activity and triggered an investigation into insider trading.

The investigation revealed a relationship between Infosys's Chaudhri – who had exclusive knowledge of the partnership – and Maniar. Not only were they former colleagues at Wipro, they also shared a phone call just minutes before Maniar began trading.

The pair had 21 days to present their defense to investigators.

Chaudhri responded, among other things, that Maniar couldn't be an insider because he didn't work for Infosys. The Infosys worker also claimed phone calls with his mate Maniar were cherry-picked to look suspicious, and Maniar was well aware that Infosys was a contender for the partnership and thus could easily have guessed it had won once Wipro was knocked out of the competition.

Keyur's response included that the analysis of the trade was "ill-fitted" and that he'd traded before, so this trade was certainly not a one-off. Gosh there's nothing wrong with taking a break from the stock market during a pandemic now is there? He also explained how his big brain worked out that Infosys was a good bet, including that he noticed there was room for improved profitability at Infosys and the company would be a significant beneficiary of digitalization spend due to COVID-19.

Sadly for Chaudhri and Keyur, SEBI board member S.K. Mohanty didn't buy those arguments – at least, not completely.

"There may be different levels of benefits accrued to various IT companies but it doesn’t change the fact that all of them have benefitted out of the COVID-19 driven digitization movement witnessed during last two years," wrote Mohanty in the order, adding "In such a scenario, I find it strange that [Chaudri] chose to selectively trade only in the scrip of Infosys and there was no position, whatsoever, taken by him in any other IT scrips during the said period or any period near around the said unpublished price sensitive information (UPSI) period."

He therefore denied the duo's request for a complete reversal and ordered further investigation.

However, some concessions were made – such as allowing the pair to hold on to mutual funds. The impounded sum remains in an escrow account with lien in favor of SEBI until further orders. ®

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