SEBI on Monday imposed a penalty of over ₹22 crore on Aurobindo Pharma, its promoter PV Ramprasad Reddy and other connected entities for violating insider trading norms.
The regulator had conducted an investigation into the trading in the scrip of Aurobindo Pharma Ltd from July 2008 to March 2009 to ascertain the regulatory violation. The probe found that the promoter entities traded in the scrip based on unpublished price-sensitive information (UPSI) pertaining to the company’s licensing and supply agreements with Pfizer Inc and made “unlawful gains”.
SEBI said Ramprasad Reddy, Chairman and promoter of Aurobindo, his wife P Suneela Rani, company MD and Reddy’s brother Kambam P Reddy, Trident Chemphar (a company belonging to the promoter group of Aurobindo), Veritaz Health Care (connected to the firm through a common address, e-mail id, acquisition of brands connected to Aurobindo, etc) and Top Class Capital Markets (connected to Veritaz through fund transfers proximate to trades executed in the scrip of Aurobindo) have been considered ‘insiders’ due to their connection with the pharma company.
These entities “purchased shares while in possession of the UPSI pertaining to Aurobindo, and made unlawful gains from having purchased its shares at a lower price before the publication of the UPSI on March 3, 2009” and thereby violating insider trading rules, said SEBI.