- SEBI found Bank of America leaked material nonpublic information ahead of a roughly $180 million Aditya Birla Sun Life AMC block trade in 2024.
- Deal details were shared beyond the need-to-know team, including broking/research/syndicate staff and via informal channels, and reached potential investors before the public announcement.
- SEBI says BofA initially denied the outreach, then revised its account after an internal review, pointing to weak controls and inadequate Chinese walls.
- The bank is seeking a multi-million-dollar settlement without admitting wrongdoing as senior India bankers have departed amid the fallout.
Read More
This incident underscores significant risk exposure for cross-border investment banks operating in India’s regulated capital markets. SEBI’s findings reveal breaches that go beyond informal lapses to structural control failures and deliberate misrepresentations, which raise both regulatory, reputational, and legal liability concerns. The case highlights several key dimensions:
Regulatory Context and Standards: Under SEBI rules, once appointed to manage a block trade—which involves the sale of a large volume of shares—a dealing bank must safeguard unpublished price-sensitive information, restrict its dissemination to “need-to-know” personnel, avoid advancing information to potential investors before formal announcements, and maintain functional internal walls (Chinese walls) between deal execution, broking, research, and syndicate teams. SEBI alleged that BofA violated multiple such provisions.
Nature and Timeline of Alleged Misconduct: The transaction in question is the share sale of Aditya Birla Sun Life AMC, appointed on 28 February 2024, with the appointment of BofA; the formal announcement of the share sale was made on 18 March. SEBI’s show-cause notice (dated 30 October 2025) alleges that prior to the public announcement, BofA’s deal team shared confidential data with broking, research, and Asia-Pacific syndicate units, who then relayed details to potential investors including HDFC Life, Norges Bank, and Enam Holdings.
False Statements and Internal Controls Failures: SEBI also found that BofA misled the regulator initially, denying that communications occurred outside the deal team; only after SEBI began collecting evidence and BofA’s internal review did it change course. The bank is said to have lacked adequate internal control mechanisms to prevent information leakage.
Consequences and Strategic Implications:
- Settlement Risk: BofA is expected to respond with a settlement proposal worth millions of dollars, likely without admitting wrongdoing. That implies financial exposure and potential precedent for similar cases globally.
- Reputational Damage: Several senior bankers in India have departed; this event may affect BofA’s ability to win mandates, particularly in high-sensitivity mandates where confidentiality is essential. Past impact already includes losing work in Asia tied to such concerns.
- Regulatory Risk Exposure: SEBI has strong enforcement powers; violation of insider trading and market manipulation rules can lead to heavy sanctions, censorship, or restrictions on future capital-markets activities in India. Compliance lapses also invite scrutiny in other jurisdictions with similar laws (e.g. U.S., Europe).
Open Questions:
- What will be the monetary scale of SEBI’s sanction, should a settlement be reached (fines, disgorgements, or restrictions)?
- To what extent did this case impact BofA’s deal flow or client trust in India, and how will BofA rebuild its internal compliance and controls frameworks (such as reinforcing Chinese walls, communications oversight, etc.)?
- Did any investors profit from the alleged leaks (i.e. was there detectable front-running or abnormal trading); and will SEBI order remedial action or compensation to harmed investors?
- How will this case influence SEBI’s enforcement posture for foreign financial institutions operating in India, particularly regarding block trades and information sharing ahead of disclosures?
Supporting Notes
- SEBI’s investigation found that Bank of America improperly shared material nonpublic price-sensitive information about a $180 million block trade involving Aditya Birla Sun Life AMC in 2024.
- The bank’s deal team is accused of disclosing confidential details to employees outside the transaction execution team, including broking, research, and Asia-Pacific syndicate units.
- Prior to the public announcement of the share sale (which was formally disclosed in mid-March 2024), certain investors—including HDFC Life, Enam Holdings, and Norges Bank—were contacted via non-deal team channels.
- SEBI alleges that BofA initially misled the regulator by denying such external communications, then later corrected its account after an internal investigation uncovered records to the contrary.
- The bank has been faulted for failing to maintain effective internal controls and for lacking appropriate information barriers (“Chinese walls”) to prevent leaks.
- BofA is preparing a settlement response expected to cost millions of dollars; the show-cause notice was issued in November 2025.
- Several senior bankers in India, including the former head of investment banking, have since left the firm amid the controversy.