India's Securities and Exchange Board (SEBI) has accused Bank of America Corp of serious regulatory violations in connection with a $170 million block trade involving Aditya Birla Sun Life AMC shares. The allegations center on improper sharing of material non-public information and misleading regulatory investigators during the probe.

Investigation Findings and Allegations

SEBI issued a show cause notice to Bank of America alleging that the bank improperly circulated price-sensitive information related to the ABSL AMC share sale. According to the regulator's findings, members of the deal team shared confidential details with employees who were not directly involved in executing the transaction, violating established internal controls.

The investigation revealed multiple breaches of insider trading regulations, with SEBI stating that the bank's conduct demonstrated "failure to maintain Chinese walls with broking/research arms, impacting safekeeping of confidential information and internal controls."

Regulatory Violations and Information Sharing

SEBI's investigation found that information related to the ABSL AMC dealings was not handled on a "need-to-know" basis. The regulator discovered that at the deal team's request, multiple divisions within the bank reached out to investors and shared confidential details. Bank employees were sharing information between workers who were not directly involved in the deal, according to sources familiar with the matter.

The notice specifically cites the bank's interactions with three major investors during the period between the bank's appointment and the formal announcement:

Misleading Investigators Allegations

SEBI has additionally alleged that Bank of America provided incomplete information during the investigation when the regulator originally inquired about the matter. The regulator claims the bank initially told SEBI that its processes around the block trade were compliant but later revised its submission after an internal review.

The bank subsequently provided records showing that individuals outside the core deal team had interacted with investors about the transaction, contradicting its initial statements to regulators.

Internal Changes and Response

Bank of America is preparing its reply to the regulator's findings. The case initially came to light through a whistleblower complaint, which led to an internal bank investigation. As a result of the internal probe, three Bank of America investment bankers in India exited the firm during 2024.

The bank has been seeking to rebuild its investment-banking team in the country since then. The company received approval to appoint Vikram Sahu as its chief executive officer for India.

Legal and Regulatory Context

Sharing material non-public information ahead of a market announcement can allow select investors to benefit from anticipated price movements and is prohibited in India, the US, and other markets. Block trades are large, privately negotiated deals for securities, executed off public exchanges and usually between big investment firms to avoid moving prices in the public markets.

Legal experts view this case as primarily an internal controls failure rather than classic insider trading. "This case looks less like classic insider trading and more like an internal-controls failure, which can attract serious regulatory action," said Sumit Agrawal, Senior Partner at Regstreet Law.

Bank of America Corp positions India as a strategic growth market within its global footprint, driven by the country's strong economic momentum and expanding client base. Vikram Sahu, Chief Executive Officer of Bank of America in India, emphasized that Asia's second-biggest economy remains one of the most compelling growth stories globally.

Strategic Priority in Global Operations

Bank of America operates across 37 countries representing over 80% of global GDP outside the United States, with India serving as an important contributor to the international business growth engine. The bank's global objective focuses on generating revenue growth above GDP while combining operating leverage to deliver over 12% earnings growth in the medium term.

Sahu highlighted three key factors that make India attractive: the country's position as one of the world's largest and fastest-growing major economies on a sustainable basis, expanding global client presence, and Indian companies scaling internationally while partnering across markets.

Economic Growth Projections Upgraded

Bank of America economists have revised India's economic growth forecasts upward based on robust economic indicators:

The upgraded projections reflect strong momentum in consumption, investment, and public spending, supported by surging fuel use, power generation, automobile sales, and credit growth. However, Sahu noted that these numbers may moderate due to potential trade headwinds.

Investment Banking Momentum

India's investment banking sector achieved record performance, with banking fees crossing the $1 billion mark in CY25 according to industry estimates. The strong momentum is expected to continue into CY26, driven by several factors:

• Strong corporate balance sheets
• Sustained economic growth
• Supportive environment for strategic consolidation and expansion

Capital Markets Dynamics

Despite foreign institutional investor outflows, India's equity markets have demonstrated resilience through domestic inflows, which Sahu described as a healthy development for capital formation. The proportion of Indian households investing in equities continues rising alongside economic growth, shifting from traditional interest-bearing fixed income investments.

Risk Assessment and Outlook

Sahu identified key risks for the medium term, including potential earnings disappointments against elevated valuation levels and inflation trajectory changes. Regarding artificial intelligence investment concerns, he distinguished the current environment from the internet bubble, noting that today's principal AI actors are established firms with strong balance sheets and clear monetization pathways.

The medium-term outlook for India remains firmly positive, supported by structural reforms, demographic advantages, and digital transformation, despite external headwinds and valuation risks that warrant caution.