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SEBI starts probe into Infosys irregularities

Meanwhile, the Bombay Stock Exchange sought a response from Infosys for failing to make disclosures about the whistleblower complaint under Regulation 30 of SEBI (LODR) Regulations, 2015.

Published: 24th October 2019 07:35 AM  |   Last Updated: 24th October 2019 08:00 AM   |  A+A-

Infosys

Infosys (Photo | EPS)

By Express News Service

BENGALURU: The Securities Exchange Board of India (SEBI) has initiated a probe into the alleged financial irregularities by IT major Infosys, involving its chief executive officer Salil Parekh and chief financial officer Nilanjan Roy.

The market regulator has also sought details of the trading data of Infosys shares from the stock exchanges, especially the build-up of derivatives in the company’s stock.

The regulator may also summon the top executives from the management and finance divisions of the company, in the wake of allegations that the CEO and CFO asked the employees to show huge profits for the recent deal wins and suppress costs for good quarterly results.

ALSO READ: BSE seeks explanation from Infosys on non-disclosure of whistleblower complaint

Meanwhile, the Bombay Stock Exchange sought a response from Infosys for failing to make disclosures about the whistleblower complaint under Regulation 30 of SEBI (LODR) Regulations, 2015.

“However, it is observed that Infosys Ltd has not made any disclosures under Regulation 30 of SEBI (LODR) Regulations, 2015, w.r.t. receipt of whistleblower complaint mentioned in the announcement. In this regard, the exchange has sought clarification from Infosys Ltd for non-disclosure of the information about the whistleblower complaint,” BSE stated.

The Infosys top management has already gone into a crisis management mode by hiring a law firm, Shardul Amarchand Mangaldas, to independently investigate the allegations. It has also held consultations with the auditor Erst & Young.

Experts opine that although the current fiasco has made the country’s second-biggest IT services company bleed, its rivals are unlikely to reap any major benefits.

“TCS, HCL Tech and Wipro could temporarily gain out of the troubles at Infosys (for investors who would like to maintain their overall IT sector exposure) but later their stock price will depend on sectoral and micro-trends,” said Deepak Jasani, head, retail research, HDFC Securities.

A letter from an anonymous employees’ group, complaining about “unethical practices” by Parekh and Roy, was sent to the Infosys Board of Directors on September 20 and to the US Securities and Exchange Commission (SEC) on October 3.

Infosys co-founder Nandan Nilakeni in his statement to the bourses on October 22, said the company is looking into the allegations and that both Parekh and Roy have been recused from this matter.



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