Infosys CEO fined $30K for insider trading lapse
BENGALURU, INDIA — Infosys CEO Salil Parekh has agreed to pay a fine of ₹25 lakh ($30,000) for failing to implement adequate insider trading controls, as revealed by the Securities and Exchange Board of India (SEBI).
The settlement follows an investigation by SEBI that lasted from 2020 to 2021. It revealed lapses in the handling of unpublished price-sensitive information (UPSI) regarding a strategic partnership between Infosys and Vanguard.
Leaked information and unauthorized trading
The investigation found that Infosys did not classify its partnership with Vanguard, an asset management company, as UPSI.
Infosys’s internal analysis had predicted that the partnership would significantly boost business and revenue. However, the information was disclosed to select internal parties on June 29, 2020, and only made public on July 14, 2020.
One Infosys employee, privy to the deal, allegedly tipped off a former colleague, who then traded Infosys stock, anticipating a price increase.
This insider trading resulted in a profit of $350,000. SEBI’s investigation into these profits led to the involved individuals being barred from the securities market and their gains being impounded.
CEO held accountable in settlement decision
SEBI emphasized the responsibility of the CEO to ensure robust internal controls to prevent insider trading.
“The CEO, MD, or such other analogous person of a listed company is responsible for putting in place an adequate and effective system of internal control to ensure compliance for preventing insider trading,” SEBI declared.
Rather than contesting the findings, Parekh opted for a settlement to avoid a potentially embarrassing inquiry.
Infosys, in a statement acknowledging the settlement order, asserted, “There is no impact on the company’s financial, operational, or other activities pursuant to the settlement order.”
Minimal financial impact for Parekh
Given his substantial compensation, the financial impact of the fine on Parekh is minimal. In fiscal year 2024, Parekh’s salary rose by 17.3% to approximately $7.9 million, making him one of the highest-paid IT executives in India.
This increase underscores the disparity between the fine and Parekh’s earnings, highlighting the limited financial repercussions for the CEO.
