Mumbai: Markets regulator Securities and Exchange Board of India (Sebi) is probing the buildup of huge derivatives positions in Infosys stock before allegations of accounting malpractices went public, said two people with direct knowledge of the matter. Huge derivatives positions were built up and put positions were accumulated in the November series of Infosys.
During Wednesday's early trades the stock after opening 4% lower has recoverd and trading 1.3% higher.
The whistleblower complaint made to the management and US Securities and Exchange Commission (SEC) became public on 21 October. The development saw American Depository Receipts (ADRs) of Infosys slump 17% on Monday, and over 16% in India on Tuesday.
The whistleblower complaint accused the company’s chief executive officer Salil Parekh and chief financial officer Nilanjan Roy of unethical accounting practices in a bid to shore up profits.
"Considering that the complaint was not made to Sebi, it has taken suo motu cognisance of it. Infosys's audit committee is already examining the complaint for its merit and was discussed on 11 October. Sebi would seek the audit committee findings for any action," said the second of the two people quoted above.
On Wednesday, BSE said Infosys has failed to disclose the whistleblower complaint to stock exchanges as per listing norms. According to Listing Obligation and Disclosure (LODR) norms, all material information needs to be disclosed, and whistleblower allegations are not material till proven to be true.
Companies receive a number of whistleblower complaints every year. Firms disclose the number and nature of whistleblower complaints without going into the content in their annual reports.
Both the CEO and CFO of Infosys were questioned by the board on the allegations on 11 October, according to reports.
Also read: Opinion | Infosys’ troubles