Infosys CEO and Managing Director Salil Parekh. File
| Photo Credit: Reuters
Infosys CEO Salil Parekh settled charges for failing to place adequate internal controls to prevent insider trading at India’s No.2 IT services exporter during a 2020 contract, the country’s markets regulator said on Thursday.
Mr. Parekh agreed to pay 2.5 million rupees (around $30,000) to settle the markets regulator’s charge, which related to a contract for Infosys to provide U.S. financial firm Vanguard with a cloud-based record-keeping platform.
Infosys publicly disclosed the deal in 2020, but the Securities and Exchange Board of India (SEBI) said “certain information which was unpublished price sensitive information (UPSI) had not been considered as such by Infosys”.
The regulator did not elaborate on what this information was but held Mr. Parekh accountable for what it considered a lapse in internal controls to prevent insider trading on that deal.
Since then, Infosys has drafted an internal policy to identify unpublished price-sensitive information and seek approval from its board and audit committee.
It has also started to provide a break-up of the total contract value of any deal in terms of average revenue per annum for comparison with its annual revenue.
“SEBI is making an example of Infosys and holding its CEO accountable,” said Shriram Subramanian, founder of proxy advisory firm InGovern Research Services.
The order will put all companies on notice as to what they consider and label as UPSI in their internal compliance systems, he said.
Bengaluru-based Infosys’ shares closed about 2% higher on the day, amid a broad-based rally in Indian equities.