'Two IndusInd execs traded shares before disclosure'

A forensic review by audit and advisory firm Grant Thornton found two executives of IndusInd Bank traded in its shares, while they were aware of accounting lapses at the bank but before those were made public, a document reviewed by Reuters showed.

The country's fifth-largest private sector bank disclosed in March that years of incorrect accounting of internal derivative trades have led to a $230 million hole in its $60.8 billion balance sheet. Its CEO Sumant Kathpalia and deputy Arun Khurana stepped down last month.

Kathpalia said in his resignation letter he was taking "moral responsibility", while Khurana resigned citing "unfortunate developments". Neither explicitly admitted or denied any wrongdoing. Grant Thornton, which the bank hired to conduct an independent forensic investigation, found as a result of its review of internal accounts and communications that there were indications Kathpalia and Khurana traded in shares of IndusInd "during a period of seeming non-disclosure", a summary of the findings showed.

"Considering that employees had knowledge of incorrect accounting and/or its impact but traded in shares of IndusInd Bank during the period may also require a determination from an insider trading perspective," the summary said.

Kathpalia and Khurana did not respond to repeated calls and text messages requesting comment. The document did not name any other executives in the context of share trading, but it mentioned one other executive's handling of the information about the accounting lapses. Sebi, IndusInd and Grant Thornton also did not respond to requests for comment.

(This is a Reuters story)