The sharp fall in the share price of Infosys following allegations of accounting malpractices at the behest of the software exporter’s top leadership has drawn the attention of India’s market regulator. While the Securities and Exchange Board of India (Sebi) says it will await the findings of the company’s internal audit committee, it has reportedly taken a suo motu cognizance of a large build-up of put options—a contract that gives the holder the right to sell a share at a pre-set price at a certain point in the future—on Infosys stock. This market position was reportedly taken just before the whistleblower letter sent by a group of people who signed off as “ethical employees" became public.

The allegations of dodgy accounting practices surfaced on 21 October, when Indian financial markets were shut. However, reports suggest put options had been secured on 1.8 million shares at a strike price of 740 on 18 October, when the scrip closed at 767.75. When trading resumed on Tuesday, Infosys shares crashed by about 16% to close at a little over 643 apiece. This means that the holder(s) of those put options could have made nearly 97 per share as a profit, had they exercised the contractual option of selling Infy shares to the trade’s counterparties on Tuesday—since the shares, at their lowest, were selling for that much less money.

The sheer size of that bet, at 1.8 million shares, arouses suspicion. It could have been just a regular bet on Infy falling, which would be legitimate, though the company had just raised its revenue guidance. But it’s hard not to wonder if insider trading was involved. Did the allegations leak? Was it, perchance, an act of internal sabotage for financial gains? The whole episode deserves a good hard look.

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