Shares of Infosys were gaining on Tuesday after the markets regulator cleared a number of the IT major’s employees and associated entities in an insider trading case.

What Happened: The Securities and Exchange Board of India (SEBI) has lifted restrictions on a group of Infosys employees and associated entities that were imposed following allegations of insider trading in 2021. In a final order issued on Monday, SEBI concluded that the evidence was insufficient to support the claims against the individuals involved.

On September 15, 2021, SEBI upheld an earlier interim order from May 2021, which barred six entities — Pranshu Bhutra, Amit Bhutra, Bharath C Jain, Capital One Partners, Tesora Capital and Venkata Subramaniam V — from trading Infosys securities.

Both Pranshu Bhutra and Venkata Subramaniam held senior roles at Infosys, and SEBI also scrutinised the trading activities of Capital One and Tesora Capital.

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Deep Investigation: SEBI’s investigation focused on alleged trades in Infosys futures and options just before the company’s quarterly results announcement for the period ending June 30, 2020. The regulator suspected insider trading, citing an unpublished price-sensitive information (UPSI) period from June 29 to July 15, 2020.

Subramaniam, listed as a designated person with access to the company’s UPSI, and his connections to the other noticees raised suspicions in particular.

However, in May 2022, the Securities Appellate Tribunal (SAT) lifted restrictions on the noticees, though SEBI continued its investigation. In its final ruling on Monday, Sebi determined that the allegations could not be substantiated.

The regulator dismissed the case against all the involved parties, stating that there was no evidence to suggest Pranshu Bhutra had access to UPSI, nor that he communicated it to his cousin, Amit Bhutra.

The investigation initially suggested insider trading due to phone calls exchanged between Pranshu Bhutra, Subramaniam, and Amit Bhutra before trades were executed by Capital One and Tesora. SEBI had argued that these activities created credible suspicion.

However, in its final order, SEBI concluded that there was no evidence to prove these connections led to insider trading, clearing all accused individuals and entities.

Price Action: Infosys’ share price was up 0.43% at ₹1,903.30 in early trade on Tuesday, easing slightly from strong early gains near the start of trade.

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