A former chief executive officer of a subsidiary of Sun Pharmaceutical Industries, along with his wife, has settled an insider trading matter with the Securities and Exchange Board of India (SEBI), after the regulator found that the couple allegedly traded in the shares of Ranbaxy Laboratories based on unpublished price sensitive information.
Show-cause notice
The capital markets regulator sent a show-cause notice in August 2017 to Abhay Gandhi and his wife Kiran Gandhi, after it found that the duo had bought a total of 7,224 shares of Ranbaxy Laboratories between February and March 2014 and sold the shares in April 2014.
The share transactions happened at a time when Sun Pharma was in the midst of talks with Daiichi Sankyo Company to acquire Ranbaxy Laboratories. Daiichi was the promoter of Ranbaxy Laboratories. Further, Daiichi agreed to the sale of Ranbaxy Laboratories in February, but the information was made public only in April.
At the time of the share purchase, Mr. Gandhi was the CEO of Sun Pharmaceutical Laboratories, a wholly-owned subsidiary of Sun Pharmaceuticals, and hence an insider as per SEBI regulations.
While Mr. Gandhi purchased 454 shares, his wife bought 6,770 shares in three tranches. Mr. Gandhi is currently the CEO of Sun Pharma’s north America business.
Meanwhile, the cases have been settled with the couple paying a total settlement charge of ₹70.13 lakh - ₹35.06 lakh each.
Interestingly, the order comes nearly seven months after the regulator decided to settle matters related to serious offences like insider trading by adopting a principle-based approach while deciding on settlement proceedings. This was in sharp contrast to the earlier framework, wherein it was decided that serious violations would not be settled through settlement route.