Infosys CEO to pay a whole $30K in penance for non-disclosure that enabled insider trading
Staff were told of lucrative partnership before the rest of us
Infosys CEO Salil Parekh has agreed to pay a fine of ₹25 lakh ($30,000) for failing to implement adequate insider trading controls, according to Securities and Exchange Board of India (SEBI) documents filed on Wednesday.
The Board's settlement order states that during the course of an investigation conducted across 2020 and 2021, the regulator determined a strategic partnership between Infosys and asset management company Vanguard was incorrectly not treated as unpublished price sensitive information (USPI) by the Indian tech services giant.
Infosys's own analysis apparently predicted the partnership would assist in expanding business and revenue – yet the outsourcing megalith didn’t disclose it to the world.
Instead, it informed select internal parties on June 29, 2020, before telling the world on July 14.
One Infosys employee close to the deal allegedly tipped off a former colleague, who started trading Infosys stock in the hope the deal would see its price rise. He was right, and profited to the tune of $350,000. SEBI spotted the profit and deemed it worthy of investigation.
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Those involved in the alleged insider trading were barred from accessing the securities market and their payouts impounded.
The regulator also wanted Infosys's CEO to wear some pain.
"The CEO, MD or such other analogous person of a listed company is responsible for putting in place adequate and effective system of internal control to ensure compliance for preventing insider trading," declared SEBI.
Parkeh opted for a settlement rather than defending the matter – an approach that spares him an embarassing inquisition.
"There is no impact on the company's financial, operational or other activities pursuant to the settlement order," declared Infosys in a statement acknowledging the settlement order.
The punishment likely has no impact on Parekh's wallet either. The CEO's salary rose 17.3 percent in fiscal year 2024 to around $7.9 million – one of the biggest pay packets for an IT exec in India. ®
Biting the hand that feeds IT
