MUMBAI – The Securities and Exchange Board of India (SEBI) has issued a show-cause notice to Bank of America’s (BofA) domestic securities unit, alleging significant breaches of insider trading regulations and internal “Chinese walls.” The probe centers on the bank’s management of a major stock sale for Aditya Birla Sun Life Asset Management Co. Ltd (ABSL AMC) in March 2024.
According to a notice dated October 30, 2025, the regulator found that the bank’s deal team possessed Unpublished Price-Sensitive Information (UPSI) but improperly coordinated with its internal broking, research, and syndicate teams to contact investors before the deal was public.
The Anatomy of the Alleged Breach
SEBI’s investigation suggests that the bank failed to maintain the required separation between its “deal side” (private information) and its “public side” (research/broking).
- The Timeline: BofA was appointed to manage the sale on February 28, 2024. The deal was not formally announced until March 18, 2024. SEBI alleges the breaches occurred during this critical interim period.
- Bypassing Controls: The deal team reportedly requested the bank’s Asia-Pacific syndicate team (based in Hong Kong) and its Indian research arm to share valuation reports and seek feedback from specific investors.
- Transparency Issues: SEBI further accused the bank of suppressing material facts and making false statements during the regulatory investigation.
Investors Cited in the Notice
The SEBI notice explicitly mentions interactions with three high-profile institutional investors:
- HDFC Life: India’s second-largest private insurer.
- Norges Bank: The central bank of Norway and a major global institutional investor.
- Enam Holdings: A prominent Indian private investment firm.
Why “Chinese Walls” Matter
In investment banking, “Chinese walls” are ethical and physical barriers designed to prevent the exchange of confidential information between departments that may have a conflict of interest.
| Department | Role in a Deal | Restriction |
| Deal Team | Manages the transaction; holds UPSI. | Must not share deal specifics with anyone outside the “walled” group. |
| Research/Broking | Provides market analysis to clients. | Must not have access to non-public deal data to prevent front-running. |
| Syndicate Team | Coordinates with potential buyers. | Should only act once a deal is officially brought to market. |
Next Steps: Settlement vs. Penalty
BofA has reportedly filed a settlement application with SEBI. This allows the bank to resolve the matter by paying a fee—likely in the millions of dollars—without legally admitting or denying the allegations.
The case originated from a whistleblower complaint in 2024, which already led to an internal bank probe and the departure of several senior executives. If the settlement is rejected, the bank could face severe penalties, including a ban from managing future share sales in the Indian market.