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Bank of America Suspends Two Indian Bankers, Know Why


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Bank of America (BofA) has placed two of its bankers in India on administrative leave after a whistleblower complaint sparked an internal investigation, according to a report by the Financial Times (FT). The investigation is centered on claims that these bankers shared confidential information with certain investors about upcoming stock sales, allowing those investors to profit illegally.

Allegations of Misconduct

The whistleblower complaint alleges that the two bankers, one of whom is a senior member of BofA’s Indian investment banking team, tipped off select investors about upcoming secondary stock offerings. This practice, known as “front-running,” involves trading on non-public information before it is made available to the public. By acting on this insider knowledge, investors can make significant profits.

Focus on a Major Deal

While the investigation covers several deals, one particular transaction is drawing the most attention—a $200 million stock sale by Sun Life, the life insurance arm of Indian conglomerate Aditya Birla Group. This sale took place in March and is now under scrutiny to determine if any improper actions occurred.

Hiring External Investigators

BofA has hired independent investigators to look into whether the two bankers involved in its Asian operations disclosed upcoming stock offerings and other sensitive, non-public information to certain investors. These investigators are tasked with examining whether the bankers broke any rules by sharing this information.

Actions Taken by Bank of America

As part of the investigation, the two bankers were placed on leave starting Tuesday. The bank is taking this step while it looks into the allegations to ensure a fair process. The investigators are looking into whether the bankers arranged meetings or communicated with hedge funds and other investors ahead of large stock sales without reporting these interactions, which is against BofA’s policies.

Regulatory Compliance Issues

The FT report also mentioned that the bankers may have failed to comply with regulations that require a “cooling-off” period before acting on sensitive information. This period is meant to ensure that no insider trading occurs. By allegedly bypassing this rule, the bankers might have given investors an unfair advantage.

Conclusion

Bank of America’s internal investigation is ongoing, and it is not yet clear what the final outcome will be. However, the bank is taking the allegations seriously and has already taken steps to address the situation by putting the two bankers on leave.

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