According to a regulatory notice seen by Reuters, India’s market regulator, the Securities and Exchange Board of India (SEBI), has alleged that a unit of Bank of America (BofA) engaged in insider trading, breached “Chinese walls” in the process of selling shares of Aditya Birla Sun Life Asset Management (ABSL AMC) in 2024, and thus violator of insider trading regulation.

SEBI’s claims are based on the investigation of BofA’s domestic securities arm’s involvement in the ₹1,470 crore ($177 million) share sale that was executed in March 2024. In an October 30 notice that is not public, SEBI said the bank’s deal team shared unpublished price-sensitive information with its broking, research and Asia-Pacific syndicate teams, which then contacted potential investors.

SEBI alleged that while in possession of confidential information related to the transaction, the deal team directly or indirectly reached out to investors and sought feedback before the formal announcement of the share sale on March 18, 2024. The regulator said such interactions violated insider trading rules that restrict the sharing of sensitive information beyond the appointed deal team.

“The conduct highlights the failure of the bank’s deal team to maintain Chinese walls with broking and research arms, impacting the safeguarding of confidential information and internal controls,” SEBI said in the notice. It also accused the bank of suppressing material facts and making false statements during the investigation.

According to the regulator, at the request of the deal team, BofA’s broking and research units shared valuation reports and other confidential details with potential investors, including Enam Holdings. In another instance, the bank’s Asia-Pacific syndicate team in Hong Kong, which was not part of the deal team, sought feedback from Norges Bank, Norway’s central bank.

SEBI named three investors in its notice—HDFC Life Insurance, Norges Bank and Enam Holdings—saying the bank’s research, broking and syndicate teams acted on behalf of the deal team instead of following a strict “need-to-know” basis. However, the notice did not cite evidence of a direct exchange of specific price-sensitive information.

The matter first surfaced in 2024 following a whistleblower complaint, which triggered an internal probe at the bank and reportedly led to the exit of senior officials.

SEBI also alleged inconsistencies in the bank’s responses during the probe. Initially, BofA denied any investor meetings related to the deal and claimed its internal legal review found no regulatory violations. It later acknowledged such interactions only after SEBI confronted it with responses from investors, the notice said.

The regulator added that the bank informed SEBI that three officials were asked to resign or leave in November 2024 for breaching internal protocols and obstructing investigations, though not specifically for violating securities laws.

Bank of America and SEBI did not respond to emailed queries. The Wall Street Journal first reported the notice. A source familiar with the matter said BofA has applied to settle the case with SEBI without admitting guilt, and the application is currently under review.

Legal experts said the case appears to focus more on internal control failures than classic insider trading, but warned that such lapses can still attract serious regulatory action.