Sebi accuses executives at pvt equity, consulting firms of insider trading
MUMBAI: The Securities and Exchange Board of India (SEBI) has alleged that current and former officials at the Indian divisions of PwC and EY, along with executives from Carlyle Group and Advent International, violated insider trading regulations. According to a November regulatory notice reviewed by Reuters, the investigation centres on a 2022 share sale by Yes Bank.
The private notice, which has not been made public, claims that two executives from PwC and EY, alongside five associates, generated illegal profits by trading Yes Bank shares before a major capital raise. In July 2022, Carlyle and Advent acquired a 10 per cent stake in the bank for $1.1 billion. Following the announcement on July 29, 2022, share prices rose 6 per cent the next day.
SEBI alleges that executives at Carlyle, Advent, PwC, and EY distributed unpublished price-sensitive information (UPSI). A former member of the Yes Bank board is also accused of sharing confidential data. In total, 19 individuals are named for various breaches; seven allegedly traded on privileged data, while four shared that information. Additionally, eight PwC and EY executives are cited for maintaining weak compliance frameworks.
The regulator found that Advent engaged EY for tax advisory and management feedback, while Yes Bank hired EY Merchant Banking Services for valuation. Simultaneously, Carlyle and Advent utilised PwC for due diligence and tax planning. SEBI contends that executives at both consultancy firms breached confidentiality, enabling others to trade before the deal.
According to the notice, EY did not include Yes Bank on a sufficiently comprehensive “restricted list.” While staff directly on the project were barred from trading, others with potential access to data were not. SEBI noted:
“No restriction was ever imposed on trading or investing in listed companies with which EY was engaged for advisory, consulting, valuation, investment banking or corporate finance services (other than audit).”
The regulator stated this lack of internal policy violated requirements for pre-clearance. SEBI has requested explanations from the CEO and COO of EY regarding these policy gaps. Similarly, the notice claims PwC lacked a “restricted stock list” for its consulting and advisory clients.
The accused parties are currently preparing responses to the show-cause notices. Such notices represent the conclusion of a SEBI probe; if the findings stand, entities may face financial penalties or market restrictions. Advent, Carlyle, EY, PwC, Yes Bank, and SEBI have not provided comments on the matter.
