Someone made a big bet that Infosys share will fall even before the whistleblower complaint against CEO Salil Parekh became public

  • The share price of Infosys fell over 10% on October 22 after a whistleblower complained of misgovernance the previous day.
  • However, there were 1.8 million shares in open interest at the strike price of 740 Put at the end of Friday.
  • Someone had bet that the share price will fall even before the complaints against CEO Salil Parekh and other management members became public over the long weekend.
The share price of Infosys fell over 10% on October 22 after a whistleblower complained of misgovernance the previous day. However, there were 1.8 million shares in open interest at the strike price of 740 Put at the end of Friday.

At the end of trade on Oct 18, Infosys shared closed at ₹767.75. At that stage, when someone bought the 740 Put in the futures and options market, they were betting that the share will fall to 740, a fall of about 3% from Friday's closing price, in the near term. The size of the bet, an open interest of 1.8 million shares, makes it a huge bearish bet on the stock.

If it is proven that the bet on 740 Put was made because the trader(s) was aware of the oncoming complaint from the whistleblowers, it may amount to insider trading.

A whistleblowers' complaint that alleged that the top management put pressure on them to not recognise the reversal of $50 million on FDR contracts as it will slash profits. Two whistleblowers accused the Chief Executive Officer Salil Parekh and Chief Financial Officer Nilanjan Roy of concealing information from auditors and keeping large deal information from the board.

The company has said that the complaint has been placed before the audit committee as per practice and will be dealt with in accordance with the company's whistleblowers' policy.

SEE ALSO:
Infosys lost $4 billion in share value due to $50 million whistleblower complaint-- showing that governance is bigger than money

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