India’s market regulator has reportedly found lapses in how Bank of America handled sensitive details linked to a large stock transaction, raising fresh concerns over information controls at global investment banks operating in the country. According to a report by The Wall Street Journal, the Securities and Exchange Board of India (SEBI) concluded in an investigation that the bank improperly shared confidential information related to a block deal valued at about $180 million.
The report also said SEBI accused the bank of misleading investigators during the course of the inquiry. The findings relate to a 2024 share sale involving asset manager Aditya Birla Sun Life AMC, for which the regulator issued a notice to the US-based lender in November.
Show-Cause Notice And Information Sharing Claims
According to the WSJ report, SEBI’s “show-cause notice” alleged that members of Bank of America’s deal team shared price-sensitive information with employees who were not directly involved in executing the block trade. The regulator maintained that these individuals were outside the core transaction group, making the information flow a potential violation of market rules.
The regulator also alleged that the bank did not have sufficient internal safeguards in place to prevent confidential capital-markets information from leaking. Sharing non-public details ahead of a transaction can allow certain investors to benefit from anticipated price movements, an activity that is prohibited under Indian securities law.
Regulator Accuses Bank Of False Statements
SEBI further accused the lender of providing false statements when investigators initially sought clarification on the alleged leak. The report said Bank of America had first told the regulator that its internal processes around the block trade were compliant. However, following an internal review, the bank later corrected its submission.
After revising its position, the bank reportedly handed over records indicating that people outside the designated deal team had communicated with investors about the transaction. These disclosures appear to have strengthened the regulator’s case during the investigation.
Whistleblower Complaint And Wider Fallout
The issue traces back to a whistleblower complaint first reported by The Wall Street Journal in 2024, which alleged that merchant bankers had shared material non-public information, or “MNPI”, with clients before launching certain block deals. At the time, a Bank of America spokesperson had told media outlets, including Reuters, that the bank had found no evidence supporting the claims.
The controversy surrounding the $180 million block deal reportedly led to multiple senior-level resignations and increased scrutiny in 2024. According to a Bloomberg report, SEBI had sought information from Bank of America as early as September.
Bank of America, which has been operating in India since 1964, provides investment banking services to large corporates, financial institutions and government bodies.
