$30K Fine for Infosys CEO Salil Parekh for Inadequate Insider Trading Controls

Salil Parekh, CEO of Infosys, has agreed to pay a $30,000 fine for not implementing sufficient insider trading controls, as documented by the Securities and Exchange Board of India (SEBI).

SEBI’s settlement order revealed that during a 2020-2021 investigation, it was found that a strategic partnership between Infosys and Vanguard, an asset management company, was incorrectly classified. Infosys failed to treat this information as unpublished price-sensitive information (USPI).

Despite Infosys’s internal analysis predicting business and revenue growth from this partnership, the information was not publicly disclosed. Instead, internal parties were informed on June 29, 2020, with the public announcement following on July 14, 2020. An Infosys employee privy to the deal allegedly informed a former colleague, who then traded Infosys stock anticipating a price increase, resulting in a $350,000 profit. SEBI’s investigation into this profit led to the involved individuals being barred from the securities market and their gains seized.

SEBI held Infosys’s CEO accountable, emphasizing that leaders of listed companies must ensure robust internal controls to prevent insider trading. Rather than contesting the issue, Parekh chose to settle, avoiding a potentially embarrassing inquiry.

Infosys stated that the settlement has no effect on its financial, operational, or other activities. Despite the fine, the financial impact on Parekh is minimal, as his salary increased by 17.3% in fiscal year 2024 to approximately $7.9 million, making him one of the highest-paid IT executives in India.

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