Aurobindo Pharma on Thursday informed the bourses that its promoters and some entities have settled an insider trading case with market regulator Sebi by paying over Rs 22 crore as settlement charges.
Last year, Aurobindo Pharma, its promoter PV Ramprasad Reddy, his wife P Suneela Rani, and three other entities – Kambam P Reddy, Trident Chemphar Ltd and Veritaz Health Care Ltd were slapped with a fine of around Rs 22.7 crore by Sebi on charges of engaging in insider trading between July 2008 and March 2009.
Aurobindo Pharma said while it paid Rs 2.2 crore settlement amount and Rs 60,000 as legal costs, the promoters cumulatively paid a settlement amount of over Rs 19.81 crore and Rs 60,000 each as legal costs.
This includes Rs 6.6 crore by Ramprasad Reddy, Rs 2.64 crore by Suneela Rani, Rs 34.65 lakh by Kambam P Reddy, Rs 7.92 crore by Trident Chemphar and Rs 2.31 crore by Veritaz Health Care. All of them also had to cough up an additional Rs 60,000 each towards legal costs as part of the settlement proceedings.
In its settlement order dated May 6, 2020, Sebi said: “…It is hereby ordered that the pending enforcement proceedings for the alleged defaults…are settled…” The order also said with the disposal of enforcement proceedings Sebi would not initiate enforcement action against the company and others for the said defaults.
However, the order stated that Sebi would have the right to take enforcement actions without commencing proceedings if it found any representation made in the settlement proceedings was subsequently found to be untrue or the applicants had breached any of the clauses/conditions of the undertakings/ waivers filed during the settlement proceedings.
The order was issued after Aurobindo and its related entities approached Sebi proposing to settle the case “without admitting or denying the findings of fact and conclusions of law, through a settlement order”. After Sebi filed an adjudicating order (AO) against Aurobindo and its promoter entities on September 23, 2019, they challenged the AO before the Securities Appellate Tribunal (SAT) on October 24, 2019, and also filed a settlement application before Sebi on October 25, 2019.
In its probe, Sebi had 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 had also charged 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”.
Last year, Aurobindo Pharma, its promoter PV Ramprasad Reddy, his wife P Suneela Rani, and three other entities – Kambam P Reddy, Trident Chemphar Ltd and Veritaz Health Care Ltd were slapped with a fine of around Rs 22.7 crore by Sebi on charges of engaging in insider trading between July 2008 and March 2009.
Aurobindo Pharma said while it paid Rs 2.2 crore settlement amount and Rs 60,000 as legal costs, the promoters cumulatively paid a settlement amount of over Rs 19.81 crore and Rs 60,000 each as legal costs.
This includes Rs 6.6 crore by Ramprasad Reddy, Rs 2.64 crore by Suneela Rani, Rs 34.65 lakh by Kambam P Reddy, Rs 7.92 crore by Trident Chemphar and Rs 2.31 crore by Veritaz Health Care. All of them also had to cough up an additional Rs 60,000 each towards legal costs as part of the settlement proceedings.
In its settlement order dated May 6, 2020, Sebi said: “…It is hereby ordered that the pending enforcement proceedings for the alleged defaults…are settled…” The order also said with the disposal of enforcement proceedings Sebi would not initiate enforcement action against the company and others for the said defaults.
However, the order stated that Sebi would have the right to take enforcement actions without commencing proceedings if it found any representation made in the settlement proceedings was subsequently found to be untrue or the applicants had breached any of the clauses/conditions of the undertakings/ waivers filed during the settlement proceedings.
The order was issued after Aurobindo and its related entities approached Sebi proposing to settle the case “without admitting or denying the findings of fact and conclusions of law, through a settlement order”. After Sebi filed an adjudicating order (AO) against Aurobindo and its promoter entities on September 23, 2019, they challenged the AO before the Securities Appellate Tribunal (SAT) on October 24, 2019, and also filed a settlement application before Sebi on October 25, 2019.
In its probe, Sebi had 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 had also charged 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”.
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