The Securities and Exchange Board of India (Sebi) has accused current and former executives from the Indian units of PwC and EY, as well as executives from US private equity firms Carlyle Group and Advent International, of breaching insider trading regulations in connection with Yes Bank’s 2022 share sale, according to a confidential notice reported by Reuters.
The show-cause notice, issued in November and not previously made public, alleges that unpublished price-sensitive information related to Yes Bank’s July 2022 capital raise was improperly shared among executives at Carlyle, Advent, PwC and EY. Sebi also accused a former Yes Bank board member of sharing sensitive information that could influence trading decisions.
The regulator’s investigation focuses on trading activity ahead of the capital raise, in which Carlyle and Advent jointly acquired a 10% stake in Yes Bank for $1.1 billion. The bank’s shares jumped around 6% the day after the transaction was announced, raising concerns about potential misuse of confidential information.
Sebi has alleged that two executives from PwC and EY, along with five family members and friends, traded in Yes Bank shares ahead of the offering and made unlawful gains. Most of the individuals named in the notice are currently employed at their respective organisations.
In total, Sebi has accused 19 individuals of insider trading violations. Of these, seven are alleged to have traded using unpublished price-sensitive information, while four are accused of sharing it. Eight executives from PwC and EY have been cited for lapses in compliance and internal controls.
According to Sebi, Advent had engaged EY for tax advisory services and feedback on Yes Bank’s management, while EY Merchant Banking Services was appointed by the bank for valuation work. Around the same time, Carlyle and Advent hired PwC for tax planning and due diligence. Sebi said confidentiality norms at both professional services firms were breached, allowing trading ahead of the capital raise.
The regulator further alleged that EY failed to maintain an adequately broad restricted list for Yes Bank, enabling some staff with potential access to sensitive information to trade in the bank’s shares. Sebi also questioned whether EY’s internal trading policy complied with regulatory requirements and asked EY India chairman and CEO Rajiv Memani and the firm’s chief operating officer to explain why penalties should not be imposed.
In PwC’s case, Sebi said the firm did not maintain a restricted stock list for advisory and consulting clients and that its internal disclosure mechanisms allowed some trades to go unreported. PwC India’s Chief Industries Officer Arnab Basu and two former executives have been asked to respond to the notice for failing to ensure an adequate code of conduct, although they have not been accused of direct wrongdoing.
The individuals and firms named in the notice are preparing responses. The show-cause notice marks the final stage of Sebi’s investigation, and penalties or trading restrictions could follow if the allegations are upheld. Neither Memani nor Basu, who have not been accused of wrongdoing, responded to requests for comment.
