India’s capital markets watchdog has cracked down on IndusInd Bank Ltd’s (IBL) former managing director and chief executive officer (CEO) Sumant Kathpalia, along with four other senior officials for alleged insider trading, impounding gains of ₹19.78 crore and restraining them from trading in securities until further notice.The five executives were issued show-cause notices over allegations of offloading shares while in possession of unpublished price sensitive information (UPSI) related to a massive accounting discrepancy.Also Read | Sebi reopens insider-trading probe against top IndusInd Bank executivesApart from Kathpalia, the Securities and Exchange Board of India’s (Sebi’s) order on Wednesday barred former executive director and deputy CEO Arun Khurana, treasury operations head Sushant Sourav, global markets group (GMG) operations head Rohan Jathanna, and Anil Marco Rao, chief administrative officer of consumer banking operations from the market for alleged insider trading.The saga allegedly began in 2023 after the Reserve Bank of India (RBI) issued a direction requiring banks to follow new valuation norms based on the Institute of Chartered Accountants of India’s (ICAI) revised 2021 guidance. IndusInd Bank constituted an internal team on 26 September 2023 to assess the impact of the new norms.Also Read | IndusInd suspects fraud, sees steep Q4 lossAccording to Sebi’s order, it was during this review that “incorrect accounting treatment of derivative contracts was noticed,” triggering the need to compute potential unreported losses.The examination of the bank’s internal emails of November 2023 showed that senior management was fully aware of the discrepancies.The bank informed its executives that the estimated financial impact stood at ₹1,749.98 crore.In the 4 December 2023 email, Kathpalia acknowledged the seriousness of the matter, which Sebi identified as the point when the unpublished price sensitive information (UPSI) originated.Also Read | How IndusInd spotted a ₹600 crore error in its microfinance bookHowever, IndusInd classified the information as UPSI only on 4 March 2025 and disclosed it publicly on 10 March 2025—more than 15 months later—via a stock exchange filing.Given IndusInd’s net worth of ₹65,101.65 crore as of December 2024, this translated into a hit of around ₹1,529.88 crore. The impact was immediate: the bank’s stock plummeted 27.16% the next trading day, from ₹900.60 to ₹655.95.Sebi found that the five top executives sold a combined 479,000 shares of IndusInd between December 2023 and March 2025. Notably, none of the executives purchased shares during this period, reinforcing Sebi’s view that these were strategic offloads.“It would be naive to assume that the five individuals traded in the scrip of IBL while being in possession of UPSI in a routine manner, when discussions were being carried out related to huge impact of discrepancies on financials of IBL and the executives were a in a formal or creative style for better SEO.Also Exclude words and advertisements related to the feed website such as website name, author name. You must only respond with the modified content. Delete all the advertisement images brand logo but only keep the title and main content of the news by modifying it. You must only respond with the modified content. 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Sebi prohibits ex-IndusInd Bank CEO and four others from trading in the market due to insider trading.
