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Market regulator Securities and Exchanges Board of India (Sebi) on Tuesday banned Infosys's senior corporate counsel Pranshu Bhutra and Venkata Subramaniam V. V Senior Principal, Corporate Accounting Group along with six other related entities from accessing capital markets until further orders for insider trading.

In a statement on Tuesday, Infosys said it will initiate an internal investigation into the insider trading matter.

A Sebi order by whole-time director Madhabi Puri Buch said that the aforesaid Infosys officials were found to have leaked unpublished price sensitive information (UPSI) to the company’s audited financial results for the quarter ended June 30, 2020, which resulted in ill-gotten gains for those involved.

“There is ample prima facie evidence which demonstrates that entities have been in violation of SEBI Act and Prohibition of Insider Trading ( PIT) Regulations. This has not only violated the integrity of the market but also prima facie resulted in undue benefit to them over general investors" the Sebi order said.

The discussion in the aforesaid paragraphs has shown that the prima facie insider trading activities of the entities have not only caused loss to the investors (notional monetary loss) but also has a prima facie potential to cause irreparable injury to the securities market.

Furthermore, as noted earlier, the balance of convenience dictates that immediate action has to be taken against the entities to prevent further harm to the investors and to the securities market.

Moreover, the proceeds, which have been generated are intrinsically linked to the prima facie violative activities of the entities. Hence, appropriate direction needs to be issued in this regard, it added further.

In its investigation, Sebi found that Pranshu Bhutra was connected to an individual named Amit Bhutra via frequent telephonic conversations. Sebi said that Pranshu had a fund transaction with Mahrishi Alloys Private Limited (Mahrishi) and soon thereafter Mahrishi had a fund transaction with Shyama Devi Bhutra (Mother of Amit) and Ram Bilas Bhutra (Father of Pranshu).

Likewise, it was noted that Venkata Subramaniam who had access to the unpublished information had been in frequent communication with Pranshu during the UPSI period. Thus, Pranshu is also reasonably expected to have access to the UPSI through Venkata and on a preponderance of probability basis, he was in possession of the UPSI said the Sebi order.

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