CHENNAI: India’s markets regulator has alleged that a unit of Bank of America breached insider trading regulations and failed to maintain mandatory internal information barriers in relation to a share sale carried out in 2024, according to a regulatory notice.
The Securities and Exchange Board of India (SEBI) said the Bank of America entity did not adequately enforce so-called “Chinese walls” designed to prevent the flow of unpublished price-sensitive information between different business divisions. SEBI alleged that teams which were required to operate independently may have had access to confidential information linked to the transaction, raising concerns over potential misuse of sensitive data.
The case centres on a secondary share sale executed last year. The regulator said the lapses, if established, would amount to violations of India’s insider trading rules, which are aimed at ensuring fair disclosure and protecting market integrity. SEBI noted that strict separation between advisory, trading and other functions is a key compliance requirement for global financial institutions operating in Indian capital markets.
The notice calls on the Bank of America unit to explain why regulatory action should not be taken and seeks detailed responses on its internal controls, compliance systems and handling of confidential information. Any enforcement action would be determined after the firm is given an opportunity to present its defence.
Bank of America has not issued a public statement on the allegations so far. The matter remains under examination, and no final conclusions have been drawn at this stage.
The move highlights SEBI’s heightened scrutiny of large financial intermediaries and its focus on enforcing insider trading norms, particularly in complex transactions involving sizeable share sales. It also signals the regulator’s intent to hold global institutions to the same governance and compliance standards expected of domestic market participants, says an independent analyst, who tracks Indian markets.