The Hindu Business Line : A ‘fine’ example

It is highly praiseworthy that the software firm had come out so publicly with the incident and immediately passed action against none other than the CEO.

Sidin Vadukut

A few days ago, I spotted a tiny little news piece in one of the business newspapers. Hidden away deep inside along with several other little news nuggets. Not more than a single paragraph of terse prose.

The headline contained the name of a rather prominent software company. One that routinely makes the covers of all the business papers. Very high profile. Very very profitable. Great share to own. Indisputable ethics.

In short, you’ve heard of it.

But the mind boggled when I saw that, contrary to all convention, this piece of news had been relegated to the depths of the inside pages. This was unheard of for the firm in question.

In not more than three lines, the story described how the company had fined its CEO Rs 5 lakh for having violated insider trading norms. And since the company is listed abroad, the nice people at the SEC had also been informed of the same.

Three things surprised me. First, the company had actually come out with the news. A quick Google search indicated that it had sent out a Press Release to all the major papers.

Second, it had actually gone ahead and fined its CEO, a man of impeccable reputation, like the company. And finally none of the mainstream media outlets felt it relevant enough to highlight it on their covers, scrolling marquees and home pages.

Last year, I read a report on the Indian financial sector by one of the big consulting firms.

One amazing fact was the proportion of shares that remain in the ownership of owners and their friends and families and such like.

The percentage was somewhere in the eighties. The report was always restrained in its criticism of the Indian financial system. After all, the whole world is a potential client for a consulting firm: the regulators and the regulated.

Yet it mentioned how insider trading was a reality in India and that regulations were doing little to curb it.

A friend in the finance business once mentioned how a company he had worked with had two or three employees who were exclusively entrusted with making ‘educated’ calls on the company’s stock price ahead of important announcements, results and so on.

No doubt the company had figured out ways of making sure nothing could be traced back to HQ.

In that environment I think it is highly praiseworthy that the software firm had come out so publicly with the incident and immediately passed action against none other than the CEO. No ‘investigation committee’ and ‘internal scrutiny teams’ for these guys. Wham! Bam! Fined you man!

But then your intrepid columnist will not be satisfied with just one Google search. He kept googling till he finally uncovered an even more interesting angle to the story.

Apparently the CEO had missed the 24-hour window to inform internally of the fact that he had recently received over 12,000 shares. And how did he receive these shares? Shady online deals? Complicated shenanigans with brokers?

Nope.

He inherited them from his mother.

Seriously someone needs to give these guys an award. A trophy. And give him a Rs 5 lakh cheque.

It would have been so easy for the board to sit around, smile and laugh at each other and pooh pooh away Mr CEO’s oversight. “Ah that’s ok CEO!” they could have said, “what’s a little give and take between the old boys in the board room eh?!”

Instead they fined the guy and sent out a press release. Bravo!

Now there remains only one question to be answered by yours truly. Which company?

Surely you’ve worked that out by now.

The writer, an alumnus of IIM-A, was a management consultant before quitting to work as a freelance writer, author and general handyman. He blogs at www.whatay.com

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