India regulator accuses executives at EY, PwC of insider trading

MUMBAI: India’s securities regulator has accused current and former executives at the local units of PwC and EY, among others, of breaching insider trading rules involving a 2022 share sale by Yes Bank, according to a regulatory notice.

The Securities and Exchange Board of India (SEBI) also accused executives at US private equity firms Carlyle Group and Advent International of sharing unpublished price sensitive information related to the deal, in violation of insider trading rules, according to the notice, which was reviewed by Reuters.

Advent, Carlyle, EY, PwC, Yes Bank and SEBI did not respond to requests for comment. Issued in November, the notice, which has not been reported previously and is not public, alleges two executives at PwC and EY and five other family members and friends made unlawful gains by trading in shares of Yes Bank ahead of its 2022 share offering.

Most of the accused individuals are still serving at their respective firms.

SEBI’s notice showed India executives of Carlyle, Advent, PwC, and EY shared unpublished price sensitive information, enabling others to trade on the information. It also accused a former Yes Bank board member of sharing price sensitive information enabling others to trade.

The notice from the regulator followed an investigation into movements in Yes Bank’s shares ahead of a July, 2022, share offering, in which Carlyle and Advent bought a combined 10% stake for $1.1 billion.

The shares of the bank opened 6% higher a day after the deal was announced on July 29, 2022. The accused individuals, along with their companies, are in the process of drafting their responses to SEBI’s notice, according to two people familiar with the investigation, who declined to be named due to sensitivity of the matter.

A show cause notice is SEBI’s first step after a probe is completed, and is meant to seek responses from accused persons and entities. If upheld, they could face monetary penalties or restrictions under Indian securities regulations.