Infosys probe is still going on, says Sebi chief Tyagi
THE MARKETS REGULATOR IS ALSO INVESTIGATING A HUGE BUILDUP OF DERIVATIVES POSITIONS IN INFOSYS STOCK
People wishing to check Infosys Ltd’s financial figures should “ask God”, Securities and Exchange Board of India (Sebi) chairman Ajay Tyagi said on Friday, two days after Infosys chairman Nandan Nilekani cited God to defend the sanctity of the company’s numbers.
Meanwhile, the regulator’s probe into the whistleblower complaint against Infosys is still on, Tyagi said. “The investors, if they want, can take comfort from Infosys statement, but our probe is still on. This is all I can tell you,” said Tyagi on the sidelines of a financial markets summit organised by the Confederation of Indian Industry (CII).
“You have to ask him (Nilekani about Infosys numbers) or you can actually ask God,” Tyagi added.
Nilekani told an analysts’ meeting on Wednesday: “Infosys has strong processes; even God can’t change the numbers of this company. Our finance team is feeling insulted by these allegations. But I don’t want to bias the investigation.”
On October 21, Infosys said it had received an anonymous whistle-blower complaint alleging “unethical practices” by senior executives, including chief executive officer (CEO) Salil Parekh and chief financial officer (CFO) Nilanjan Roy, to boost short-term revenue and profit. A day later, Nilekani, in a stock exchange filing, said the complaints were “being dealt with in an objective manner”.
Sebi is also investigating a huge buildup of derivatives positions in Infosys stock, noticed before the whistle-blower allegations, raising suspicions of potential insider trading.
Amid reports of credit rating agencies failing to take appropriate rating action on issuers before they default, Tyagi said: “In many cases, the rating agencies have been blamed, and rightly so. But in some cases they do not get timely default information or the issuers are not cooperating .... We have taken cognizance of that.”
Mint reported on September 18 that the Reserve Bank of India (RBI) and Sebi were working on a framework that will allow for more accurate exchange of borrower data between banks and credit rating agencies. That apart, Sebi is also working on a new set of reforms to boost infrastructure investment trusts, or InvITs.
Sebi will soon come out with regulations that will allow InvITs to raise funds through preferential allotment and rights issue in line with what is allowed to companies under the Issue of Capital and Disclosure Requirements.
Tyagi said divestment by public sector undertakings (PSUs) will help boost IPOs. “My view is that this has to be kick-started with some confidence building. In this, I feel the government’s plan for divestment of PSUs should come in a big way to boost the market.” In this year’s budget the government said that listed companies would need to maintain a public float of 35%. However, a majority of PSUs are yet to achieve a 25% public float .