SEBI’s rare insider trading crackdown shakes Big Four and PE giants: What the Yes Bank case means for markets and investors
India’s market regulator has delivered one of its strongest regulatory signals in years, accusing senior executives at EY, PwC, Carlyle Group and Advent International of breaching insider trading regulations linked to Yes Bank’s 2022 share sale, according to a confidential regulatory notice reviewed by Reuters.
The Securities and Exchange Board of India (SEBI) alleged that unpublished price sensitive information (UPSI) relating to the July 2022 capital raise was shared across professional networks, enabling certain individuals to trade Yes Bank shares ahead of the deal.
The regulator has accused 19 individuals in total, including current and former executives of global consulting firms, private equity funds, and even a former Yes Bank board member.
None of the companies — SEBI, Yes Bank, EY, PwC, Advent or Carlyle — responded to media queries at the time of publication.
The Yes Bank deal that triggered the investigation
The investigation centres on Yes Bank’s July 2022 share offering, in which Carlyle and Advent acquired a combined 10% stake for $1.1 billion.
The timing raised regulatory red flags.
Yes Bank shares opened 6% higher the day after the transaction was publicly announced on July 29, 2022 — a movement that prompted SEBI to investigate whether certain individuals had traded in advance using privileged information.
SEBI’s notice alleges that executives from advisory firms involved in the transaction gained access to sensitive deal information and failed to uphold confidentiality barriers, allowing information to leak into personal trading circles.
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Here’s what happened today and why traders reacted
Although the notice itself is not public, its emergence has sent a clear signal to markets.
Traders and investors tracked the development for three reasons:
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It signals tighter regulatory scrutiny on deal-related information flows
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It reinforces SEBI’s intention to enforce corporate governance rigorously
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It raises reputational concerns around advisory firms involved in capital market transactions
Market participants believe such actions may lead to stronger compliance frameworks across investment banking, consulting and private equity, which is structurally positive for long-term market credibility.
SEBI alleges systemic compliance failures inside EY and PwC
According to the notice, both EY and PwC failed to maintain adequate internal safeguards around unpublished price sensitive information.
SEBI alleged that EY did not place Yes Bank on a sufficiently broad “restricted list”, which should have barred employees with potential access to sensitive information from trading in the stock.
“No restriction was ever imposed on trading or investing in listed companies with which EY was engaged for advisory, consulting, valuation, investment banking or corporate finance services (other than audit),” SEBI said in the notice.
The regulator has asked Rajiv Memani, EY India’s chairman and CEO, and the firm’s COO to explain why penalties should not be imposed, arguing that EY’s internal trading policies did not comply with regulatory requirements.
In PwC’s case, SEBI said the firm lacked a comprehensive restricted stock framework for advisory clients. It also criticised PwC’s internal disclosure policy, noting that it required employees to report only the first purchase and sale of shares — a system SEBI said allowed subsequent trades to go unreported.
PwC’s Chief Industries Officer in India, Arnab Basu, along with two former executives, has been asked to respond to SEBI’s findings. The notice clarifies that neither Memani nor Basu have been accused of personally trading on insider information.
How advisory mandates enabled access to sensitive information
The notice provides granular details on how access to information was created.
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Advent hired EY for tax advisory and sought feedback on Yes Bank’s management
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EY Merchant Banking Services was engaged by Yes Bank for valuation work
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Carlyle and Advent hired PwC for tax planning and due diligence
SEBI concluded that executives across these engagements failed to uphold adequate confidentiality protocols, allowing sensitive information to circulate beyond deal teams.
Seven individuals are accused of trading based on privileged information, while four are accused of sharing that information with others.
Why this regulatory action matters for investors
This is a rare instance where SEBI has named senior executives at global consulting and private equity firms in an insider trading probe linked to a large capital market transaction.
For investors, the implications are significant:
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It strengthens confidence in market integrity and surveillance
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It signals stricter enforcement of information barriers in deal ecosystems
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It improves long-term trust in IPO and fundraising processes
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It discourages opaque information advantages, which protects retail participants
Over the last few years, SEBI has intensified its crackdown on market abuse. In a recent parallel case, the regulator also alleged insider trading breaches involving Bank of America’s India unit during another fundraising process.
Regulatory scrutiny rises amid capital market boom
The action comes at a time when Indian capital markets are witnessing record fundraising activity, attracting global institutional investors seeking diversification away from US assets amid geopolitical uncertainty.
As deal volumes rise, so does regulatory sensitivity to governance failures.
A show-cause notice is typically SEBI’s first formal step after completing an investigation. If the allegations are upheld, the accused could face:
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Monetary penalties
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Market bans
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Restrictions on professional roles
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Reputational consequences
The individuals and entities involved are currently preparing formal responses to SEBI.
Bottom line for investors
For equity investors, this episode is not about Yes Bank’s immediate stock movement but about the quality of India’s market ecosystem.
The regulator’s action reinforces a critical message: access to information must be tightly controlled, and violations will be pursued regardless of institutional stature.
In the long run, such enforcement strengthens market credibility, supports fair price discovery, and enhances India’s attractiveness as a global investment destination.
