Markets regulator Securities and Exchange Board of India (SEBI) has accused a Bank of America (BofA) unit of violating insider trading rules and breaking internal “Chinese walls” in a 2024 share sale, a notice showed.
The SEBI notice followed its investigation into the conduct of the bank’s domestic securities unit in managing a March 2024 stock sale of Aditya Birla Sun Life Asset Management (ABSL AMC).
The investigation found the bank’s deal team, while holding unpublished price-sensitive information on the share sale, contacted potential investors “directly/indirectly”, said the notice, which is not public and has been reviewed by Reuters.
At the deal team’s request, the bank’s broking arm, research team, and Asia-Pacific syndicate team reached out to investors and shared valuation reports and other confidential details, the October 30-dated notice said.
“The conduct highlights the failure of (the bank’s) deal team to maintain Chinese walls with broking/research arms, impacting safekeeping of confidential information and internal controls,” SEBI said.
‘Suppressed material facts’
It added that the bank suppressed material facts and made false statements during the probe.
Bank of America and SEBI did not respond to emailed queries from Reuters.
The Wall Street Journal first reported the SEBI notice to the bank, citing people familiar with the matter.
The bank has filed an application with SEBI to settle the charges without admitting guilt, a source with direct knowledge of the matter said. The application is under review, added the source, who spoke on condition of anonymity due to the sensitive nature of the issue.
The case first came to light in 2024 via a whistleblower complaint, which led to an internal bank probe and the exit of senior officials.
Improper contact with investors?
SEBI’s notice cites the bank’s interactions with three investors: HDFC Life, India’s second-largest private insurer; Norges Bank, Norway’s central bank, and Enam Holdings, an Indian investment firm.
Indian insider trading rules, like those in many other countries, prohibit an investment bank from sharing price-sensitive information without a legitimate purpose with employees outside of the deal team once it has been appointed to manage a transaction.
SEBI said in this case the bank’s research, broking and Asia-Pacific teams sought investor feedback after the bank was appointed to manage the transaction on February 28, 2024 and before the formal announcement of the share sale on March 18, which it said was a breach of the rules.
The notice cites one such example where the deal team asked the broking arm to provide a valuation report for ABSL AMC and its sponsor, Aditya Birla Group, to Enam Holdings, a potential investor in the share sale that was worth $177 million.
In another instance, the deal team requested the APAC syndicate team in Hong Kong — not a part of the deal team — to seek feedback from Norges Bank on its interest in the offering.
“As such, information related to dealings with ABSL AMC was not handled by (the bank) on a ‘need-to-know’ basis,” SEBI said, adding that broking, research, and syndicate teams acted on behalf of the deal team.
The notice did not provide evidence of an exchange of specific price-sensitive information in any of the interactions.
HDFC Life, Norges Bank and Enam Holdings did not respond to emailed queries. ABSL AMC also did not respond.
“This case looks less like classic insider trading and more like an internal-controls failure, which can attract serious regulatory action,” said Sumit Agrawal, Senior Partner at Regstreet Law.
Bank flip-flopped on conversations: SEBI
The SEBI notice said that in response to its queries, the bank initially denied any meetings or communication with investors regarding the share sale and said its internal legal review found no violation of Indian regulations.
The bank claimed investor feedback was generic and preceded its appointment to manage the share sale, the notice said.
It was only after SEBI confronted the bank with responses from HDFC Life and Enam that it acknowledged conversations with potential investors about the share sale, it said.
The notice said the bank told SEBI that three officials were asked to resign or leave in November 2024 for violating internal protocols by not taking clearances for meeting with potential investors and obstructing investigations, and not for breaching securities laws.
The bank “tried to make untrue statements or suppress material facts while furnishing information to SEBI”, the notice said.
Published – January 08, 2026 11:26 am IST
