Sai Ishvarbharat B. and Haripriya Suresh
BANGALORE (Reuters) – Infosys Chief Executive Salil Parekh has settled charges of failing to ensure adequate internal controls to prevent insider trading at India’s No. 2 IT services exporter during a 2020 contract, the country’s market regulator said on Thursday.
Parekh agreed to pay 2.5 million rupees (about US$30,000) to settle market regulator fees that were associated with the contract for Infosys (NS:) to provide US financial services firm Vanguard with a cloud-based accounting platform.
Infosys publicly disclosed the deal in 2020, but the Securities and Exchange Board of India (SEBI) said that “certain information that was unpublished pricing information (UPSI) was not considered as such by Infosys.”
The regulator did not specify what the information was, but held Parekh responsible for what it considered lapses in internal controls aimed at preventing insider trading in the deal.
The order will not affect its financial, operational or any other activities, Infosys said in a statement, which did not provide any further details on the allegations.
Infosys has since developed internal policies to identify unpublished price-sensitive information and seek approval from its board of directors and audit committee, SEBI said in its order.
It also began providing a breakdown of the total contract value of any deal in terms of average annual revenue for comparison to annual revenue.
“SEBI is leading by example with Infosys and holding its CEO accountable,” said Sriram Subramanian, founder of consulting firm InGovern Research Services.
He said the order will inform all companies about what they consider and designate as UPSI in their internal compliance systems.
Shares of Bengaluru-based Infosys closed up about 2% amid a broad rally in Indian equities.
($1 = 83.5070 Indian Rupees)