India Regulator Accuses EY and PwC Executives of Insider Trading Violations
Mumbai – India’s securities regulator has accused senior executives from major global consulting firms of breaching insider trading regulations in connection with a high-profile banking share sale. The allegations mark a rare escalation in enforcement involving multinational professional services firms operating in India.
According to regulatory findings, current and former executives from consulting and advisory units were allegedly involved in sharing and misusing unpublished price sensitive information. The case relates to a capital raising transaction by a major private sector bank in 2022.
The regulator has also accused executives from international private equity firms of improperly sharing confidential information related to the transaction. Officials claim the information was passed on before the public announcement of the share sale.
The investigation focused on unusual movements in the bank’s share price ahead of the fundraising exercise. Shortly after the transaction was made public, the stock rose sharply, triggering regulatory scrutiny.
A regulatory notice issued after the investigation alleges that multiple individuals traded shares using privileged information. The notice further claims that some executives enabled family members and associates to benefit from advance knowledge of the deal.
Several of the individuals named in the notice continue to hold senior positions at their respective firms. Others are former executives who were involved in advisory and due diligence work linked to the transaction.
The regulator stated that executives from advisory firms failed to maintain adequate safeguards to prevent information leakage. Confidentiality protocols were allegedly breached during tax advisory, valuation, and due diligence assignments.
In one instance, the regulator found that internal controls designed to restrict employee trading were insufficient. Certain employees with potential access to sensitive information were not restricted from trading in the bank’s shares.
The notice highlights shortcomings in internal compliance systems, including incomplete restricted-list mechanisms. While some employees were barred from trading, others were not, despite the risk of indirect access to confidential data.
The regulator has asked senior leadership at the consulting firms to explain why penalties should not be imposed. It argued that internal codes of conduct did not fully comply with insider trading regulations.
The alleged violations include failure to require pre-clearance for trades by individuals with potential access to unpublished information. Regulators said this undermined the integrity of compliance frameworks.
In the case of one firm, the regulator found that disclosure requirements applied only to first-time trades, allowing repeated transactions to go unreported. This gap allegedly enabled unlawful trading activity.
The notice also accused a former bank board member of sharing confidential information. This information was allegedly passed to individuals who then traded shares ahead of the public announcement.
The accused parties are currently in the process of preparing responses to the regulatory notice. A show-cause notice represents the first formal step toward potential penalties under securities law.
If the allegations are upheld, individuals and firms could face financial penalties, trading restrictions, or other regulatory action. The process will depend on responses and subsequent hearings.
The case comes amid a broader regulatory crackdown on market manipulation and insider trading in India. Authorities have stepped up enforcement as capital market activity has surged.
India has seen a sharp rise in fundraising activity, attracting global investors seeking diversification. Regulators are under pressure to ensure transparency and fair market practices.
Recent enforcement actions indicate a tougher stance on compliance failures, even among prominent global firms. Market participants are watching closely for the outcome of this case.
The allegations have raised concerns about governance standards within advisory and consulting businesses. Stronger internal controls are likely to come under increased regulatory focus.
The regulator emphasised that access to sensitive information carries responsibility, regardless of whether misuse is intentional or indirect. Firms are expected to enforce strict compliance across all levels.
The case underscores the importance of robust internal firewalls in complex financial transactions.
Its outcome could reshape compliance expectations across India’s professional services sector.
