India’s markets regulator has accused Bank of America’s local investment bank unit of breaching insider trading rules and internal confidentiality protocols in connection with a 2024 stock sale, underscoring compliance risks for foreign banks operating in India’s capital markets.
In a show-cause notice issued on 30 October and reviewed by Reuters, the Securities and Exchange Board of India (SEBI) said the bank’s securities unit shared unpublished price-sensitive information about a March 2024 block trade involving shares of Aditya Birla Sun Life Asset Management (ABSL AMC) with internal teams beyond the authorised deal group. SEBI said the deal team’s actions compromised “Chinese walls” meant to protect confidential client information and violated insider trading norms designed to ensure fair and orderly markets.
According to the notice, the bank’s broking arm, research unit and Asia-Pacific syndicate team contacted potential investors – including HDFC Life, Norway’s central bank Norges Bank and Enam Holdings – before the formal announcement of the share sale, sharing valuation reports and other details that should have remained confidential during the block trade process. The involvement of multiple internal arms of the bank in pre-announcement communications highlighted significant lapses in internal controls and governance, SEBI said.
The case originated from a whistleblower complaint in 2024, which prompted an internal probe and the departure of senior officials, reflecting how compliance breakdowns can have personnel and reputational consequences for financial institutions. SEBI also said Bank of America initially provided inaccurate information to the regulator during its investigation, a point that reinforced concerns over transparency and regulatory cooperation.
Bank of America has applied to settle the matter with SEBI without admitting or denying wrongdoing, a move that could involve a multimillion-dollar settlement but leaves unresolved whether the regulator will accept the terms or pursue further sanctions. SEBI’s response to the settlement request is under review, and the outcome could influence how international banks structure compliance frameworks and information barriers in India’s rapidly evolving capital markets.
