IndusInd Bank’s board is mulling to impose penalties on its former MD & CEO Sumant Kathpalia and Deputy CEO Arun Khurana for their alleged involvement in insider trading. The bank’s board has held several meetings to discuss the move and is seeking legal opinion on the same, MoneyControl reported. This comes weeks after the CEO and deputy CEO of IndusInd Bank stepped down amidst increasing regulatory scrutiny over the bank’s functioning and its top executives for accounting lapses in its derivatives portfolio.
“The board can’t ignore the findings of the Grant Thornton report, which has indicated that MD, Deputy CEO were aware of the currency derivatives accounting discrepancy issue, and they transacted in the bank stocks before the issue became public,” MoneyControl reported, citing a source.
The board’s move flowed from the findings of the financial audit conducted by Grant Thornton. The board has reportedly decided to take notice of the breach by the two former bosses and decide the penalties based on the bank’s internal insider trading policy. Before imposing a penalty, the bank, as per its insider trading policy, will give time to the ex-bosses to explain themselves.
If the bank’s board slaps a penalty for violation, it is likely that the market’s regulator securities and exchange board of India (Sebi) would carry out similar proceedings against the two ex-heads.
The former CEO, Kathpalia, mentioned in his resignation letter addressed to IndusInd Bank’s board that he stepped down to take moral responsibility for the acts of commission and omission that had come to his notice.
“Considering the recent unfortunate development, wherein the bank determined an adverse accounting impact of P&L, on account of incorrect accounting for internal derivatives trades, I having oversight of the Treasury Front office function, as the Whole Time Director, Deputy CEO and a part of Senior Management of the bank, hereby resign, effective immediately,” said Khurana in the letter.
