In a swift crackdown, the Securities and Exchange Board of India (SEBI) has slammed the brakes on former IndusInd Bank CEO Sumant Kathpalia, ex-deputy CEO Arun Khurana, and three senior executives, banning them from the securities market. The charge? Insider trading on a scale that allegedly saved them nearly ₹20 crore in losses.
This explosive move stems from SEBI’s suo moto probe revealing that between late 2023 and early 2025, these insiders sold shares while sitting on unreleased, sensitive information about massive accounting glitches in the bank’s derivatives portfolio—details that only came to light publicly in March 2025, causing the stock to tumble over 27%.
Kathpalia and Khurana exited the scene soon after the bank’s March disclosure, which followed an internal audit triggered by RBI’s 2023 directive on derivatives. The audit unearthed significant misclassifications that slashed the bank’s net worth by over ₹1,500 crore.
What’s damning is SEBI’s finding that these executives had knowledge of the irregularities as early as September 2023 and had internally tallied the damage months before the market got wind of it. Yet, this critical info wasn’t flagged in the bank’s official digital logs as sensitive until just days before the public announcement.
SEBI’s order paints a clear picture: trading by these insiders wasn’t routine—it was a calculated move to dodge losses amid looming financial turbulence. Khurana offloaded over 3.4 lakh shares, dodging a hit of ₹14.39 crore; Kathpalia sold 1.25 lakh shares, avoiding ₹5.20 crore in losses; the other three officials made smaller, yet notable, exits.
No fresh share purchases or approved trading plans during this period were found. SEBI’s stance is unambiguous—such clandestine trades erode investor trust and corrode market integrity.
As part of the interim clampdown, the quintet must now park the impounded ₹19.78 crore in fixed deposits under SEBI’s watch, submit detailed asset inventories within two weeks, and await further investigation. While some trading restrictions may ease after compliance, their IndusInd shares remain off-limits.
With the probe far from over, SEBI signals this could just be the opening chapter in a saga exposing financial missteps at the highest levels. The accused have three weeks to respond and seek hearings, but for now, their market privileges lie frozen in the spotlight of regulatory justice.
