Whalesbook
India's Deal Boom Faces Compliance Test Amidst Insider Trading Allegations
The vibrant Indian deal-making sector, which saw a record 2,658 transactions worth $133 billion in 2025 [3], is now under a regulatory spotlight. The Securities and Exchange Board of India (Sebi) has initiated a significant investigation into alleged insider trading violations involving partners at global professional services firms EY and PwC [4, 5]. These allegations, reportedly stemming from lapses in internal controls concerning price-sensitive information, cast a shadow over the integrity of India's rapidly expanding deal ecosystem.
The Scale of India's Deal Market
India's financial markets demonstrated remarkable resilience in 2025, achieving record transaction volumes and values. Mergers and acquisitions (M&A) alone accounted for $60.2 billion across 963 deals, while private equity and venture capital (PE/VC) investments added $37 billion [2, 3, 5]. The initial public offering (IPO) market also saw substantial activity, raising approximately $22 billion through over 100 offerings in 2026 [5]. Professional services firms are deeply embedded in this landscape, participating in nearly 90% of M&A and PE transactions and providing critical financial statement preparation for most significant IPOs [5]. This extensive involvement grants them unparalleled access to confidential, price-sensitive information, making robust internal controls paramount [4, 5].
Sebi's Investigation and Allegations
The current regulatory action focuses on a 2022 share sale by Yes Bank, where Sebi alleges that individuals associated with EY India and PwC India, alongside executives from private equity firms Carlyle Group and Advent International, violated insider trading rules [6, 10, 14]. According to a confidential Sebi notice, unpublished price-sensitive information was allegedly shared among these entities, enabling unlawful trading ahead of the capital raise [6, 10, 14]. Sebi has issued show-cause notices, querying EY India chairman and CEO Rajiv Memani, chief operating officer Hiresh Wadhwani, and PwC India chief industries leader Arnab Basu, along with two former PwC senior partners, to explain potential penalties related to firm-level compliance processes [4, 5, 6].
While EY and PwC assert they maintain stringent internal controls, the allegations suggest these safeguards may have been bypassed. Insiders suggest methods could include informal communication channels and routing trades through associates [5]. Sebi's investigation has reportedly highlighted how entrenched informal networks can undermine even sophisticated information containment protocols [5].
Competitor Landscape and Sectoral Context
The Big Four accounting and advisory firms – EY, PwC, Deloitte, and KPMG – are dominant players in India's deal advisory space [8]. As of April 2025, EY led India's M&A league tables by deal count and value, with PwC also ranking prominently [8]. This intense competition and firms' comprehensive involvement across the entire deal-making ecosystem, from due diligence to execution, amplify the inherent risks of information leakage [5]. While EY and PwC have not commented on the ongoing Sebi investigations, these allegations could impact the confidence of investors and corporate clients within India's highly competitive M&A environment [4].
Expert Concerns and Enforcement Outlook
Corporate governance experts view the allegations as serious breaches that could have implications for investor confidence [5]. Shriram Subramanian of InGovern Research Services noted that while firms often settle such cases, establishing insider status presents significant challenges for Sebi [5]. He emphasized the need for Sebi to bolster its enforcement capabilities, as current penalties, often limited to disgorgement of profits, may lack sufficient deterrent effect [5]. JN Gupta, founder of Stakeholder Empowerment Services, echoed concerns about low conviction rates in Indian insider-trading cases, underscoring the difficulty in prosecuting such complex financial crimes [5]. The regulatory action marks a rare instance where Sebi has named senior executives from global consulting and private equity firms in such a probe [14].