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In an interim ex-parte order, the Securities and Exchange Board of India (SEBI) has barred former chief executive officer of IndusInd Bank Sumant Kathpalia, and four others from accessing the securities market on alleged insider trading in the bank’s shares.
The regulator found that these individuals were aware of the accounting discrepancies in the bank’s derivatives portfolio at least 15 months before the bank made it public, violating SEBI’s insider trading rules.
Click here to read the ex-parte interim order
SEBI has also impounded ₹19.78 crore collectively from the five individuals as the loss avoided from the sale of their shares based on the unpublished price sensitive information (UPSI).
Along with the former CEO, others restrained from the market include the bank’s former deputy CEO Arun Khurana, head of treasury operations Sushant Sourav, head of GMG operations Rohan Jathanna, and chief administrative officer of consumer banking operations.
The regulator began examining the matter after an over 27 per cent fall in IndusInd Bank’s stock price on March 10, 2025, after the bank disclosed the discrepancies and an impact of 2.35 per cent on the bank’s net worth or ₹1,529 crore.
SEBI found that the management first knew about the issues on September 26, 2023, through an inter-departmental team after RBI’s master direction, and even internally acknowledged a “huge impact” due to these discrepancies on December 4, 2023.
During the UPSI period before the issues were made public, Arun Khurana had sold 3.48 lakh shares, Sumant Kathpalia had sold 1.25 lakh shares, while the others had sold 1,000-2,000 shares each at various times.
“Indulging in insider trading activities while being an insider and in possession of UPSI tantamounts to committing fraud upon innocent investors and jeopardising their interest, who did not have access to the material information,” SEBI’s whole-time member Kamlesh Varshney said in the order.
Further, stock exchanges confirmed that these officials did not submit a trading plan for FY24 and FY25, which includes pre-decided trades for insiders in possession of UPSI. Accordingly, Khurana is directed to disgorge ₹14.39 crore and Kathpalia ₹5.2 crore.
The regulator expects other investigations into disclosure violation and insider trading by these officials and others to be completed expeditiously, it said in the order.
The executives against whom orders have been passed can file their reply objections within 21 days and can indicate if they would like to avail the opportunity of personal hearing.
Published on May 28, 2025
This article first appeared on The Hindu Business Line
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