SEBI has raised allegations against a Bank of America unit over controls on a major equity block deal. The case relates to a 2024 Aditya Birla Sun Life AMC share sale worth about $180 million.
SEBI issued a show-cause notice that sets out suspected failures in protecting transaction confidentiality. The regulator is examining how the bank handled material non-public information (MNPI) before execution.
SEBI alleges that the deal team shared price-sensitive details. Employees outside the execution group reportedly received the information. The notice also questions whether “Chinese wall” policies restricted access to timing, size, and price range.
SEBI has reviewed access lists, communication trails and investor outreach. SEBI is checking whether staff without a deal role still obtained details. It is also checking whether they contacted market participants before launch.
The notice refers to unpublished price-sensitive information, often called UPSI in India. Rules require firms to restrict UPSI to staff with a clear role. Banks must record wall-crossing approvals and keep audit trails for regulators on request.
Block deals involve large share transfers that exchanges execute in a designated window. Banks may sound out investors, but they must control access to MNPI. SEBI’s notice tests whether the bank managed wall-crossing, logging, and supervision effectively. It also reviews training and escalation.
SEBI also faulted the bank for weak guardrails around confidential capital-markets transactions. Regulators expect firms to limit distribution lists and log access. They also expect strict need-to-know controls for MNPI.
SEBI also alleges that the bank misled investigators during the inquiry. The notice questions who received deal information and when staff contacted investors.
After an internal review, the bank reportedly corrected parts of its earlier account. It then provided records that pointed to communications by non-deal staff. This development increased SEBI’s compliance concerns, the notice said.
SEBI is also checking whether monitoring tools flagged unusual sharing. Compliance teams track message patterns, access requests, and call lists during sensitive deals. SEBI will compare those controls with the bank’s policies and training.
Bank of America is preparing a formal response to the show-cause notice. The process allows written submissions and hearings under SEBI’s procedures. SEBI can issue directions, impose penalties or close the matter. SEBI treats MNPI controls as central to fair markets. Early disclosure can let select investors position for expected price moves. Such conduct can weaken equal access and transparent price discovery.
SEBI has not issued a final order. It will review the response, documents and supervisory findings before a decision. The matter may also end through SEBI’s settlement framework, subject to approval.