India’s securities regulator has formally charged a Bank of America subsidiary with significant regulatory breaches during a 2024 stock offering, according to an official notice reviewed by Reuters. The Securities and Exchange Board of India (SEBI) alleges that the bank’s domestic securities unit violated insider trading protocols and compromised internal information barriers while managing a March 2024 share sale for Aditya Birla Sun Life Asset Management (ABSL AMC).
The regulatory investigation uncovered that Bank of America’s deal team, while possessing confidential price-sensitive information, improperly coordinated with potential investors through both direct and indirect channels. According to the October 30-dated notice, the bank’s broking division, research analysts, and Asia-Pacific syndicate team contacted investors at the deal team’s request, sharing valuation reports and other protected details.
SEBI’s findings indicate a systemic failure in maintaining ‘Chinese walls’ – the internal barriers designed to prevent information sharing between different divisions of financial institutions. The regulator stated that the bank’s conduct demonstrated inadequate safeguards for confidential information and deficient internal controls throughout the transaction process.
The case originated from a 2024 whistleblower complaint that triggered both an internal bank investigation and subsequent regulatory scrutiny, resulting in the departure of several senior officials. Bank of America has reportedly submitted a settlement application to SEBI seeking resolution without admitting guilt, though the proposal remains under review according to sources familiar with the matter.
While the notice references interactions with three specific investors – HDFC Life, Norges Bank, and Enam Holdings – regulatory officials emphasized they found no evidence of actual exchange of specific price-sensitive information. Legal experts characterize the case as primarily concerning internal governance failures rather than traditional insider trading, though such violations can still warrant substantial regulatory penalties.