SEBI bans 2 Infosys employees from stock market for insider trading; unwinds Rs 3 cr unlawful profit

Capital markets regulator Securities and Exchange Board of India (SEBI) has banned two Infosys employees from capital markets after having found them complicit in an insider trading charge. Venkata Subramaniam, senior principal, corporate accounting, Infosys; and Pranshu Bhutra, senior corporate counsel, Infosys; along with six other entities have been banned from buying or selling stocks until further orders. Although Infosys has not been fined by the market regulator, the stock was under pressure on Wednesday morning, trading 1% lower, among the worst performers of the day on Sensex.

The insider trading charge was levelled against Venkata Subramaniam and Pranshu Bhutra to be insiders who supplied information to Amit Bhutra, Bharath C Jain, Capital One Partners, Tesora Capital, Manish C Jain, and Ankush Bhutra and made unlawful gains worth Rs 3.06 crore by dealing the futures and options segment. The trades under review date back to July 2020, just days before and after Infosys announced its quarterly results.

How insiders traded Infosys

The market regulator noted that Infosys employees Venkata Subramaniam and Pranshu Bhutra were in constant communication with each other over telephone calls and other means of communication during the period under review. “Thus, Pranshu is also reasonably expected to have access to the UPSI (unpublished price-sensitive information) through Venkata and on the preponderance of probability basis he was in possession of the UPSI,” the order said.

Positions taken ahead of results

Trades in the F&O segment were made by Amit Bhutra on behalf of Tesora Capital through various brokerage firms. Tesora had taken a net long position in Infosys for 30,000 shares in Futures between July 13, 2020, to July 14, 2020, at an average price of Rs 796.82 and thereafter the entire aforesaid long position was squared off between July 15, 2020, to July 16, 2020. Infosys results were declared on July 15.

Amit Bhutra, along with others had also made trades on behalf of Capital One. Capital One took a net long position in the scrip for 2,76,000 shares in Futures between July 10, 2020, and July 14, 2020, at an average price of Rs 794.67 and thereafter the entire aforesaid long position was squared off between July 15, 2020, to July 16, 2020.

SEBI said that Capital One Partners, Amit Bhutra and Bharath C Jain made Rs 2.79 crore from the trades. The market regulator said that Rs 26.81 lakh were generated from the trades made by Tesora Capital, Amit Bhutra, Manish C Jain and Ankush Bhutra. In total Rs 3.06 crore have been impounded by SEBI as unlawful gains.

Infosys employee transferred money

SEBI in its order highlighted that Pranshu Bhutra of Infosys transferred a total of Rs 1.1 crore to Mahrishi Alloys Private Limited in the month of June 2020. Amit Bhutra along with Ram Bilas Bhutra the father of Pranshu Bhutra, is a Director of Maharishi Alloys, according to SEBI. “Hence, Pranshu is prima facie connected with Mahrishi through banking transactions and through Mahrishi and Shyama Devi, to Amit Bhutra,” SEBI order said. Further, the regulator said that Pranshu Bhutra was in constant touch with Amit Bhutra through telephonic communication.