Insider trading: Sebi asks Top Class to disgorge Rs 3.77 cr made in Aurobindo Pharma's scrip

Sebi found that during the UPSI period, i.e during July 22, 2008 to March 3, 2009, Top Class Capital Markets traded in APL shares in violation of Prohibition of Insider Trading regulations. In the process, it made a notional profit of Rs 3,77,89,062, Sebi noted in its final order.

Markets regulator Sebi on Tuesday asked Top Class Capital Markets to disgorge illegal gains of over Rs 3.77 crore made by it while indulging in insider trading in Aurobindo Pharma's shares. The amount has to be paid along with 12 per cent per annum interest from March 4, 2009, till the date of actual payment of disgorgement amount within 45 days from the date of coming into force of the order, regulator said.

In its order on Tuesday, Sebi noted that the order comes into force with an immediate effect but in view of the COVID-19 pandemic, the direction on disgorgement of amount "shall come into force on September 1, 2020, or on such date when the lockdown if extended beyond August 31, 2020, comes to an end". In addition, the entity has been restrained from accessing markets for one year and for dealing in Aurobindo Pharma's scrip for 3 years.

The order follows an investigation carried out by Sebi into the trading of the scrip of Aurbindo Pharma Ltd (APL) during the period from July 2008 to March 2009. Investigation revealed that Pfizer Inc issued a press release on March 2, 2009, while APL issued a press release on March 3, 2009, regarding certain licensing and supply agreements entered into between them on July 22, 2008, November 30, 2008 and December 29, 2008.

The news of entering into these agreements became public only after the press releases, hence, it was unpublished price-sensitive information (UPSI) till then. Sebi found that during the UPSI period, i.e during July  22, 2008 to March 3, 2009, Top Class Capital Markets traded in APL shares in violation of Prohibition of Insider Trading regulations.

In the process, it made a notional profit of Rs 3,77,89,062, Sebi noted in its final order. "There is sufficient circumstantial evidence on record to establish that Noticee No. 5 had access to UPSI regarding the Licensing and Supply Agreements of APL with Pfizer Inc and hence, was an 'insider'," Sebi said.

Noticee refers to Top Class Capital Markets Pvt Ltd. Sebi said the firm is "guilty of the charge of 'insider trading'" and violated PIT norms.

In the same matter, Aurobindo Pharma, its promoter P V Ramprasad Reddy, his wife P Suneela Rani, and three other entities settled the case with the markets regulator after paying over Rs 22 crore towards settlement charges..

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