Yes Bank Insider Trading: SEBI Blows the Whistle on PwC, EY, and Private Equity Giants
The ghost of Yes Banks 2022 turnaround is back to cause trouble for some names in global consulting and private equity. Today something big happened in Indias world. The Securities and Exchange Board of India which is also known as SEBI found out that some top people at PwC, EY, Carlyle Group and Advent International did something wrong. They broke the rules about insider trading. This news is making a lot of waves in Indias financial circles. Yes Banks 2022 turnaround is still. Now it is linked to this big problem. The people at SEBI are taking this seriously and it is bad news, for PwC, EY, Carlyle Group and Advent International.
The investigation is looking at the sale of Yes Bank shares that happened in July 2022. This sale was worth $1.1 billion. It was supposed to help Yes Bank get back on its feet.. Now people are looking at this deal very closely because they think some people got secret information that they should not have had. This is what people are calling ” leaks” and it is a big problem, for Yes Bank.
The thing that happened with the “Inner Circle” leak is really interesting. It is, about how the “Inner Circle” leak happened. People want to know what went wrong with the “Inner Circle” and how it got leaked. The “Inner Circle” leak is a deal and everyone is talking about it. So let us see how the “Inner Circle” leak happened.
The Securities and Exchange Board of India or SEBI for short found some suspicious things going on with trading. This happened a few days before the big announcement on July 29 2022. SEBI noticed that the banks stock went up by 6 percent the morning after the deal was made public. But here is the thing, some people who had information, about the deal let us call them insiders of the SEBI investigation they had already gotten themselves into a good position to make some money from the SEBI investigation into the banks stock.
The regulator says that some important information about prices that was not made public called Unpublished Price-Sensitive Information got out when people were checking everything and planning taxes. This is a problem because the companies that were supposed to make sure everything was okay like PwC and EY are now being accused of not being careful enough, with this information. Unpublished Price-Sensitive Information is very sensitive. It looks like PwC and EY did not handle Unpublished Price-Sensitive Information correctly.
The Scope: They have given a show cause notice to 19 individuals. The notice is for these 19 individuals. The Scope is, about these 19 individuals who got the show cause notice.
The Traders: There are seven people who’re in trouble, for making trades because they got secret information, which is also known as “insider tips.”
The people who gave us this information are four up officials. They are supposed to be the ones who shared the information. These four senior officials allegedly acted as the sources of this data.
The Compliance Gap is a problem. Eight important executives are in trouble because they did not do a good job of keeping the company safe. They were supposed to have protections, in place like firewalls to prevent bad things from happening to the institution. The Compliance Gap is still an issue and these executives are feeling the heat for not doing their job properly with the Compliance Gap.
The “Restricted List” Failure
The worst thing we found out is that the big companies, like the Big Four firms are not doing their job properly. The SEBI discovered that EY made a mistake with Yes Bank. They did not put Yes Bank on the list of companies that they are not supposed to trade with which is something that all companies, in the industry are supposed to do to avoid problems. This list is called the ” list” and it is a standard rule that all companies follow to prevent their employees from buying and selling shares of the companies they are working with like Yes Bank.
In a similar vein, PwC is being called out for not having a robust disclosure system for its advisory and consulting arms, allowing trades to go undetected for years. SEBI has now asked high-profile leaders, including Rajiv Memani (EY India Chairman) and Arnab Basu (PwC India Chief Industries Officer), to explain why their firms shouldn’t face heavy penalties for these structural lapses.
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