India’s securities regulator has accused current and former executives at the Indian units of PwC and EY, along with executives.
At U.S. private equity firms Carlyle Group and Advent International, of violating insider trading rules linked to Yes Bank’s 2022 share sale, according to a regulatory notice reviewed by Reuters.
The Securities and Exchange Board of India (SEBI) alleged that executives at Carlyle, Advent, PwC and EY shared unpublished price-sensitive information related to the deal, enabling illegal trading in Yes Bank shares. A former Yes Bank board member has also been accused of sharing sensitive information, the notice said.
The show-cause notice, issued in November and not previously reported, said two executives at PwC and EY, along with five family members and friends, made illegal profits by trading Yes Bank shares ahead of the 2022 share offering. Most of the accused continue to work at their respective firms.
SEBI’s action followed an investigation into trading activity ahead of Yes Bank’s July 2022 share sale, in which Carlyle and Advent acquired a combined 10% stake for $1.1 billion. The bank’s shares rose about 6% when trading opened the day after the deal was announced on July 29, 2022.
Advent, Carlyle, EY, PwC, Yes Bank and SEBI did not respond to requests for comment. Two people familiar with the investigation said the individuals and firms named in the notice are preparing responses, requesting anonymity due to the sensitivity of the matter.
A show-cause notice marks SEBI’s first formal step after an investigation and seeks explanations from those accused. If the allegations are upheld, the individuals could face financial penalties or market restrictions under Indian securities laws.
The regulator said a total of 19 people were accused of insider trading violations, with seven alleged to have traded on privileged information and four accused of sharing it. Eight PwC and EY executives were named for what SEBI described as weak compliance processes.
SEBI found that both EY and PwC failed to enforce adequate confidentiality safeguards. The notice said EY did not place Yes Bank on a sufficiently broad restricted list, allowing some employees with access to sensitive information to trade shares. SEBI has asked EY India chairman and CEO Rajiv Memani and the firm’s chief operating officer to explain why penalties should not be imposed, citing shortcomings in the firm’s internal trading policies.
In PwC’s case, SEBI said the firm lacked a restricted stock list for advisory and consulting clients and had internal rules that allowed some share trades to go unreported. PwC India’s Chief Industries Officer Arnab Basu and two former executives have been asked to respond over alleged failures in the firm’s compliance framework. Memani and Basu have not been accused of personal wrongdoing.
The case marks a rare instance of senior executives at global consulting and private equity firms being accused of insider trading in connection with a major capital-raising transaction. It comes as SEBI steps up enforcement amid a surge in fundraising by Indian companies and increased foreign investor interest.
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