BofA gets show-cause notice from Sebi for alleged insider trading

Sebi issues show-cause notice to Bank of America over alleged insider trading lapses linked to Aditya Birla Sun Life's 2024 stake sale

India’s market regulator, the Securities and Exchange Board of India (Sebi), has sent a show-cause notice to US-based Bank of America (BofA) for allegedly breaching insider trading rules linked to a 2024 share sale of Aditya Birla Sun Life Asset Management.

 

The bank has filed for settlement of charges in the matter under Sebi’s Settlement Regulations, without admitting or denying the regulator’s findings, sources said.

 

This comes after an internal investigation by the US-based bank in 2024. Whistleblowers claimed that BofA bankers involved in the transaction shared deal information with investors before the public announcement of the stock sale in India.

 

 

The stake sale was announced on March 18, 2024, and carried out later that month.

 

While the bank’s investigation did not confirm any insider trading, BofA India lost three dealmakers as the probe revealed misconduct. Those who left included the firm’s co-head of investment banking, the country head of global capital markets, and a director in the investment banking unit.

 

Sebi also asked BofA for more details on the matter in 2024.

 

Sebi’s Prohibition of Insider Trading (PIT) Regulations prevent individuals with access to unpublished price-sensitive information (UPSI) from trading a company’s shares, as it could lead to unfair gains.

 

BofA and Sebi did not reply to emails seeking comment.

 

The Wall Street Journal first reported the story, citing sources familiar with the case.

 

“This appears less like a case of classic insider trading and more indicative of gaps in internal controls and human resource conflicts. As whistleblower complaints in India increasingly escalate into insider trading investigations, investment bankers are being subjected to an exceptionally high compliance threshold — where even procedural lapses in Chinese walls, SDDs or need-to-know protocols can trigger serious regulatory action, notwithstanding the absence of established market abuse,” said Sumit Agrawal, senior partner, Regstreet Law Advisors, and former Sebi officer.