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Shares of Sun Pharma dropped as much as 10.4 percent, its biggest decline since May 2017, after news agency PTI reported quoting unnamed sources that the market regulator is likely to reopen an insider trading case against the drugmaker.
The development comes after a whistleblower reportedly approached Securities and Exchange Board of India with a document alleging various irregularities by the company, its promoter Dilip Shanghvi and others, the report said quoting the sources.
In August 2017, Sun Pharmaceutical, its managing director Dilip Shanghvi and nine other entities settled an insider trading probe on payment of Rs 18 lakh towards settlement charges.
SEBI has powers to reopen cases of settlement related to insider trading on various grounds. According to the PTI sources, alleged irregularities by the company’s promoters and others in raising funds through foreign currency convertible bonds are also likely to be investigated by the watchdog.
In August 2017, the regulator had not disclosed details of the case. However, it had appeared to be related to the acquisition of Ranbaxy by Sun Pharma from Japanese drugmaker Daiichi. That’s because the settlement with the regulator has also been done by former Ranbaxy Chief Executive Arun Sawhney, Daiichi’s Director Kazunori Hirokawa, its ex-Chairman Takashi Shoda and its former senior executive officer Tsutomu Une.
Shoda is said to have led Daiichi’s acquisition of Ranbaxy in 2008, though the Japanese giant had to eventually sell its stake in the company to Sun Pharma in 2014. Besides, the settlement was done by Ranbaxy’s former secretary SK Patawari, Sun Pharma’s directors Sudhir V Valia and Sailesh Desai, and its company secretary Sunil Ajmera.
SEBI had agreed to settle proposed adjudication proceedings in the case, pertaining to violation of the “internal code of conduct for prevention of insider trading” framed by the company, after it was approached by these 11 entities with a plea under the settlement regulations “without admitting or denying the findings of fact and conclusion of law”.
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