When Omidyar India chief Roopa Kudva was an independent director on the Infosys board back in 2017, she came under a scathing attack from the software company’s founder NR Narayana Murthy.
At the time, Murthy had alleged corporate governance lapses at Infosys with regard to the high severance package paid to former CFO Rajiv Bansal. “Ms Roopa Kudva said that we had to sign an NDA (non-disclosure agreement) if we wanted to know the reason (for the severance package)! So much for shareholder transparency and democracy," Murthy had remarked.
Kudva was replaced as the chairperson of the Audit Committee of Infosys following the incident. She went on to complete her tenure as independent director till February 3, 2020.
Today, the head of one of the world’s most well-known impact investment firms faces an infinitely graver situation.
On Monday, the Securities and Exchange Board of India (SEBI) barred Roopa Kudva and her husband Vivek Kudva, head of the Asia Pacific region for Franklin Templeton, from the capital markets for a year besides imposing monetary penalties for unfair trade practices.
SEBI in a notification noted that the husband-wife duo and Vivek Kudva's late mother Vasanthi redeemed their personal investments from the beleaguered six debt schemes of Franklin Templeton Mutual Fund based on confidential and non-public information. Franklin Templeton Mutual Fund had decided to shut six debt schemes on April 23, 2020, by suspending redemptions for more than 300,000 investors.
The Kudvas had redeemed their investments before the decision was taken.
The couple met at the Indian Institute of Management (IIM) Ahmedabad, each pursuing independent disciplines between 1984 and 1986. While Vivek Kudva had enrolled for an MBA, Roopa Kudva was doing her PGDM. Prior to this, Vivek Kudva had completed his electrical engineering from IIT Delhi, and Roopa Kuva had graduated in the sciences from Cotton College in Assam.
After IIM Ahmedabad, Roopa Kudva joined state-run Industrial Development Bank of India (IDBI Bank) in 1986 where she worked for six years before joining rating agency Crisil in 1992 as senior rating analyst. She climbed up the corporate ladder and went on to head Crisil for western India in 1996. She remained in Crisil till 1998 before taking up a senior role at S&P Global Ratings in Paris where she worked till 2000. She then returned to Crisil as executive director and was promoted to managing director and CEO in 2007 where she continued till 2015.
Around that time, Omidyar Network, the impact investment firm backed by eBay founder Pierre Omidyar’s philanthropic trust, was on the lookout for a new head for its India investments. About a year ago, Jayanth Sinha, the former managing director, had quit to puruse a career in politics. Roopa Kudva stepped into the job in March 2015.
Under her, Omidyar India has backed high-growth technology startups such as online pharmacy platform 1mg, local language content and news aggregator DailyHunt, edtech platform Vedantu, coding platform WhiteHat Jr (which was acquired by Byju's) and classified platform Quikr.
Vivek Kudva has over 34 years of experience in the financial services sector (banking and investment management). After his MBA at IIM Ahmedabad, he worked with HSBC in different capacities till 2004. He then joined National Bank of Oman for two years. From 2006 onwards he has served at Franklin Templeton India.
Incidentally, SEBI has noted that Vivek Kudva should have conducted justly in line with the quasi-fiduciary responsibility given his wide experience with the securities market. SEBI underlined that Vivek Kudva should have declared upfront his investments to Franklin Templeton and should have sought to recuse himself from any decisions related to the debt schemes. Further, he should have refrained himself from accessing any non-public information relating to the schemes, material or non-material.
But far from recusing himself, he went about seeking non-public information like liquidity profile, redemptions, concentration etc. which are critical indicators of the failing health of the debt schemes under winding up, it noted. Hence, SEBI “is constrained to note that conduct of Vivek in redeeming units in the debt schemes while in possession of material non-public information is not in line with the high ethical standards expected of a person vested with such quasi-fiduciary responsibilities,” it added.
The markets regulator also highlighted that Roopa Kudva is an experienced finance professional in her own right and was expected to be aware of the sensitivity of the transaction.
Vivek Kudva said in a statement that he is reviewing the SEBI order and considering appropriate next steps which may include filing an appeal before the Securities Appellate Tribunal.
“My personal transactions in the two schemes (under winding-up) have been conducted in good faith and with no intent to gain unfair benefit. As stated in the SEBI order, I had already placed myself in a similar position as investors in April 2020 and the proceeds of the redemptions were voluntarily set aside such that I and my family will ultimately receive no more than the investors remaining in the Schemes. My interests therefore remain fully aligned with outcomes that investors in the two schemes under winding up will have,” he added.