MUMBAI: The Securities and Exchange Board of India (Sebi) has barred former IndusInd Bank CEO Sumant Kathpalia and four other senior officials from trading in the securities market for alleged insider trading.
The market regulator found that the executives sold shares of the bank while in possession of unpublished price-sensitive information (UPSI) related to a Rs1,572-crore accounting discrepancy- part of a larger Rs3,000 crore-plus issue within the bank’s derivatives portfolio.
In its interim order issued on May 28, Sebi said the five individuals offloaded shares ahead of a March 2025 public disclosure about the accounting lapses, thereby potentially avoiding losses totalling nearly Rs20 crore.
The others named in the order are Arun Khurana (former executive director and deputy CEO), Sushant Sourav (head of treasury operations), Rohan Jathanna (head of GMG operations), and Anil Marco Rao (chief administrative officer for consumer banking operations).
During the UPSI period, Kathpalia sold 1.25 lakh shares, while Khurana offloaded nearly 3.5 lakh shares.
Sebi has directed the officials to deposit the avoided-loss amount in fixed deposits with a lien in favour of Sebi and impounded the respective bank accounts.
“The trading done by insiders, while being in possession of UPSI, caused notional monetary loss to the innocent investors who did not have free and equal access to the crucial/material information,” the regulator noted in its order.
Concealment and delay
Sebi’s action follows a probe that began after IndusInd Bank’s stock tumbled on March 10, 2025, when it publicly disclosed discrepancies in accounting for its derivatives book. According to an exchange filing that day, the issue emerged from an internal review conducted after the implementation of the RBI’s 2023 Master Direction on derivative accounting. The bank warned of a likely impact equivalent to 2.35 per cent of its net worth as of December 2024.
However, Sebi found that the senior management had been aware of these discrepancies as early as December 2023. Internal email exchanges revealed that by December 4, 2023, top executives, including Kathpalia, had acknowledged the “huge impact” of the accounting mismatches.
Yet, the information was not made public until March 2025, raising red flags about suppression of critical data that materially affected investor decisions.
Sebi Chairman Tuhin Kanta Pandey recently indicated that the regulator is closely examining “egregious violations” by IndusInd’s leadership presumably hinting at insider trading.
