HYDERABAD: Pharma biggie
Aurobindo Pharma Ltd
(APL), its promoters and related entities were on Monday slapped with a Rs 22.7 crore fine by
Sebi
for insider trading. Among those fined are APL chairman PV Ramprasad Reddy, his wife P Suneela Rani and three related entities. They have been charged with insider trading between July 2008 and March 2009.
Aurobindo Pharma, which was set up in 1986 by P V Ramprasad Reddy and K Nityananda Reddy, is the second largest pharma company in India with revenues of Rs 19,563 crore in FY 2018-19. The company got listed on Indian bourses in 1995
In its probe, Sebi found that Ramprasad Reddy, his wife and others traded in the
Aurobindo Pharma
scrip prior to the company informing the public about certain licencing and supply agreements it had inked with Pfizer Inc. Sebi has also charged another promoter Kambam P Reddy, brother of then APL MD K Nithyananda Reddy, along with promoter group entity Trident Chemphar Ltd as well as connected entities Veritaz Health Care Ltd and Top Class Capital Markets Pvt Ltd.
Though the agreements with Pfizer were signed on July 22, 2008, Nov 30, 2008 and Dec 29, 2008, APL issued a press release only on March 3, 2009, after which the price of APL scrip shot up.
Sebi found that these six promoters and promoter entities violated insider trading norms by trading in the APL scrip based on unpublished price sensitive information (UPSI) and made “unlawful gains from having purchased shares of APL at a lower price before publication of the UPSI on March 3, 2009”.Pointing out that as APL failed to disclose the price sensitive information and did not close the trading window for employees and directors during the UPSI period, Sebi said it had violated the model code of conduct for prevention of insider trading (PIT) for listed companies.
Sebi in its order stated: “…APL had significant role in determining the period when the UPSI was in existence and enforcing corresponding trading window restrictions as well as ensuring that price sensitive information did not remain unpublished for a long duration from July 22, 2008, when it first arose, till March 3, 2009, seventy days after the last PSI related to agreement between APL and Pfizer had arisen.
“The absence of timely disclosures by APL, apart from being in violation of the stipulations in the Listing Agreement, the Model Code of Corporate Disclosure Practices and the Model Code for Prevention of Insider Trading as prescribed in the PIT Regulations 1992 also gave rise to information asymmetry between PSI available to insiders of the company and ordinary investors, which was exploited by the promoter and related entities to carry out trades in the APL shares when in possession of the said PSI.”
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