Executives at EY, PwC accused of insider trading in 2022 Yes Bank case

Executives at EY, PwC accused of insider trading in 2022 Yes Bank case

The action highlights a crackdown on market manipulation

Current and former executives at the local units of PwC and EY, among others, have reportedly been accused of breaking insider trading rules involving a 2022 share sale by Yes Bank.

Executives at US private equity firms Carlyle Group and Advent International have also been accused by the Securities and Exchange Board of India (SEBI) of sharing unpublished price sensitive information related to the deal in violation of insider trading rules, as per the regulatory notice. The notice accuses a total 19 individuals of insider trading rule violations. Seven of the 19 individuals traded based on privileged information and four shared that information. The notice named eight PwC and EY executives for weak compliance processes.

Requests for comment went unanswered by Advent, Carlyle, EY, PwC, Yes Bank and SEBI.

The notice, issued in November, which is not in the public domain, claims that two executives at PwC and EY and five other family members made illegal gains by trading in shares of Yes Bank ahead of its 2022 share offering. Most of the accused are still working at their respective firms. India executives of Carlyle, Advent, PwC and EY shared unpublished price sensitive information, helping others to trade on the information; SEBI’s notice showed. It also accused a former Yes Bank board member of sharing price sensitive information, helping others to trade.

The regulator’s notice follows a probe 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.

A day after the deal was announced on July 29, 2022, the shares of the bank opened 6% higher.

The accused, along with their companies, are in the process of preparing their replies to SEBI’s notice according to sources familiar with the investigation who wished to remain anonymous.

If the show cause notice is upheld, the accused could face monetary consequences or limitations under Indian securities rules.

The regulatory action is a unique instance wherein senior executives at global consultants and private equity firms have been accused of insider trading violations linked to a capital raising deal.