MUMBAI/BANGALORE: Markets regulator Sebi has started investigating if there were insiders who traded in the shares and derivatives contracts of Infosys with the knowledge that there was a whistleblower complaint to the board, dated September 20, which once disclosed to the public could affect the stock price. On Wednesday, leading bourse BSE also asked the IT major to explain why it did not disclose the whistleblower complaint immediately after it was lodged with the company.The complaint to the Infosys board alleged that the company’s top management indulged in unethical practices to shore up profits through irregular accounting and had also withheld information from its auditors. The letter said that the writers had emails and recorded conversations to prove their points. Sebi rules stipulate that any price-sensitive information should be disclosed to the shareholders of the company in a time-bound manner, usually through a disclosure on the stock exchanges. However, the law does not specify what could be construed as price-sensitive information and companies often use this grey area in law to not disclose information quickly or not at all.After the whistleblower complaint was made public on Sunday, the Infosys ADR on Monday crashed 12% in the US and its stock plunged over 16% on Tuesday in India. As a consequence, the company’s market value had come down by about Rs 53,100 crore or $7.5 billion.Trading data on the bourses also pointed toward insider trading in the stock and derivatives contracts on Infosys between September 20 and September 25. On Wednesday, Infosys stock on BSE closed 1.2% higher after sliding 4% in early trade while its ADR on the US bourses was trading marginally higher at $9.05 in mid-session.The markets regulator usually gets data from its integrated market surveillance system (IMSS), which has the capability to track all the trades under its regulatory purview, including stocks, commodities, debt, interest rates, currency and derivatives contracts on all these assets across all the exchanges where these are traded. It also collects relevant data from the exchanges, as and when required.Sources said the regulator was looking at all angles relating to illegal trading and non-disclosures in Infosys. As a rule, Sebi does not officially speak about ongoing investigations. BSE, on the other hand, disclosed it had already written to Infosys, asking it to explain why it failed to make the relevant disclosures.On Wednesday, BSE noted Infosys chairman Nandan Nilekani ’s acknowledgement of the previous day that the board had received the complaints. “However, it is observed that Infosys has not made any disclosures under Regulation 30 of Sebi (LODR) Regulations, 2015, with respect to receipt of whistleblower complaint mentioned in the announcement,” BSE said on its website. LODR stands for listing obligations and disclosure requirements.On Tuesday, Nilekani had said that the letter dated September 20 was received by a board member on September 30. The public disclosure of the letter happened on Sunday, only after the whistleblowers sent out copies of the letter to the media.Commenting on the Infosys matter, Institutional Investor Advisory Services (IIAS), a corporate governance advisory firm, said on Wednesday that given the damage that this episode has caused, one can argue that the company should have been more forthcoming.“There were occasions when the company could have made a full disclosure and if nothing else issued a holding statement. It could have done so when the letter was first received or after the board meeting where it was decided to investigate this fully or when tasking its auditors to do so,” it said.However, IIAS also observed that there is such a thing as opening yourself too much through excessive disclosure. “Does a disclosure of an investigation into a whistleblower complaint fuel more fears or does it provide comfort? What if the board feels the complaint is frivolous, but it turns out that there was substance in the allegations? Or the management panicked, and dispensed time and energy only to find it was boxing shadows? When should the disclosure be made — once a complaint is received or when the board decides to investigate or once the investigation is complete and there is something more tangible to share with investors? Unfortunately, there are no straight answers,” it said.