India markets regulator on Wednesday restrained former IndusInd Bank (INBK.NS) CEO, deputy CEO and three others from trading in securities until further orders over alleged insider trading.
By selling shares before the information was public, they avoided 197.8 million Indian rupees ($2.32 million) in losses, it said, with a majority of that coming from CEO Sumant Kathpalia and his deputy Arun Khurana.
The regulator has frozen their accounts to the extent of losses avoided. The two executives stepped down from their roles last month.
IndusInd Bank did not respond to queries from Reuters.
The lender disclosed on 10 March that years of incorrect accounting of internal derivative trades led to a $230 million hit to its accounts. This led to share price of the fifth largest private sector bank to crash by 27.165%.
Its senior management was aware of accounting discrepancies since at least December 2023 and had internally acknowledged its "huge impact", the regulator said in its preliminary findings, citing emails.
The three others facing allegations of insider trading are treasury head Sushant Sourav, operations head Anil Rao and head of global markets group Rohan Jathanna.
"The trading done by insiders, while being in possession of UPSI (unpublished price sensitive information) caused notional monetary loss to the innocent investors who did not have free and equal access to the crucial/material information," the regulator said.
($1 = 85.3980 Indian rupees)
