The Securities and Exchange Board of India (SEBI) is likely to investigate the involvement of Swiss banking giant Credit Suisse in alleged leak of price sensitive information about a share deal.
The regulators have accused Hong Kong-based fund manager Factorial Capital Management of creating of big short position for L&T Finance Holdings before the announcement of share sale earlier in March.
Go deeper with GlobalData
Access deeper industry intelligence
Experience unmatched clarity with a single platform that combines unique data, AI, and human expertise.
Although the Indian body has not accused Credit Suisse of any wrongdoing, but it is set to inquire if bank’s staff had informed Factorial that the L&T deal would be done at a discounted price, reported Reuters.
Factorial had accounted for 84.15% of all L&T Finance outstanding futures and options positions and covered its shorts through purchases in the heavily discounted share offering after L&T Finance shares fell 7.2% to 79.15 rupees on March 13.
Factorial had a profit of around INR200m ($3.37m) in the transaction, which the SEBI cited as ‘aberrant and suspicious.’
SEBI said, "It is highly unlikely that one who does not have any exposure in the scrip will take such an aggressive short position, unless it had some definite information about fall in price of the scrip in near future."
US Tariffs are shifting - will you react or anticipate?
Don’t let policy changes catch you off guard. Stay proactive with real-time data and expert analysis.
By GlobalDataFurther, the Indian regulator claimed that the examination of chat transcripts provided by Credit Suisse Securities (India) revealed that before the L&T announcement, brokers at the investment bank had exchanged messages such as ‘likely to come in at a steep discount about 70 types’ amongst themselves.
The maximum penalty that can be levied by the regulator for insider trading charges is around INR250m ($4.22m) or three times the profit made on fraudulent trades.
SEBI under the new chairman UK Sinha has muscled up against the insider trading and share manipulation, which are said to be the key factors behind the loss of $5.15bn in retail investments from stock funds over the past five years.
