India's market regulator has found that Bank of America shared confidential details ahead of a 2024 block trade and later misled regulators during the investigation.
India's securities regulator has accused Bank of America of improperly sharing confidential information ahead of a $180 million (roughly Rs 1,500 crore) stock block trade in 2024 and of providing inaccurate statements during the subsequent regulatory inquiry, according to people familiar with the matter, as reported by The Wall Street Journal newspaper.
India's stock market regulator, the Securities and Exchange Board of India (SEBI) issued a show-cause notice to the bank in November, setting out allegations related to the sale of shares in Aditya Birla Sun Life AMC, the WSJ reported.
According to the notice, SEBI alleged that Bank of America's deal team shared material, price-sensitive information about the transaction with employees inside the bank who were not directly involved in executing the deal.
The regulator said such disclosures breached regulatory requirements designed to protect confidential information in capital markets transactions.
SEBI also accused the bank of providing false or misleading statements after investigators sought explanations regarding the alleged leak of information, the WSJ reported.
The notice further stated that the bank failed to maintain adequate internal controls to prevent confidential deal-related information from being disseminated beyond authorised personnel.
The Wall Street Journal had previously reported in 2024 that a whistleblower complaint alleged Bank of America staff had contacted investors ahead of the block trade to discuss details of the transaction.
According to the WSJ report, bank records showed that bankers had communicated with potential investors, including institutional funds, before the deal was publicly announced.
Following the whistleblower complaint, SEBI sought information from the bank and began a year-long investigation. Bank of America initially told the regulator that its handling of the transaction complied with standard procedures, the WSJ reported.
However, after conducting its own internal review, Bank of America later revised its submissions and provided SEBI with records showing that employees outside the core deal team had communicated with investors about the transaction, according to the WSJ.
The Wall Street Journal reported that several senior bankers in India subsequently left the firm, including a former head of investment banking for the country.
Bank of America is preparing a formal response to the show cause notice and is expected to seek a settlement with SEBI that could involve a financial penalty, without admitting or denying wrongdoing, people familiar with the matter told the WSJ.
SEBI has not publicly commented on the notice. Bank of America declined to comment, the WSJ reported.
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