Mumbai: Market regulator Sebi has imposed a total penalty of Rs 2.5 lakh on three senior officials of Orchid Chemicals and Pharmaceuticals for alleged violations of insider trading norms.
In three separate orders, Sebi has imposed a penalty of Rs 1 lakh each on Madhusudhan Rao Bidurukontham and U P Senthil Kumar, and another Rs 50,000 on Rajendra Janardhan Sarangdhar.
While, Bidurukontham was the Chief Operating Officer - Global Generics, Senthil Kumar served as Senior Vice President, Betalactams (Process) and Sarangdhar was the Senior General Manager (PD Lab & Production), at Orchid Chemicals and Pharmaceuticals, Sebi said in orders dated November 29.
Following a news article on September 18, 2010 on Ranbaxy planning to sell its balance 13.02 percent stake in Orchid, Sebi conducted a probe into the trading in the shares of Orchid Chemicals.
The probe revealed that all the three entities had violated norms pertaining to prohibition of insider trading.
As per the norms, all directors/officers/designated employees who buy or sell any number of shares of the company shall not enter into an opposite transaction -- sell or buy any number of shares during the next six months following the prior transaction. They can also not trade in the stock futures of the company at any time.
While Bidurukontham has been accused of both trading in the stock futures of the company and opposite transactions, Sarangdhar had allegedly entered into opposite transactions and Senthil traded in the stock futures of Orchid Chemicals and Pharmaceuticals.
In its order against Bidurukontham and Sarangdhar, the regulator observed that senior officials are expected to be aware of major developments in the company they are employed with.
"Thus for orderly conduct of securities market, it is of utmost importance that such persons should not be doing buy and sell transactions in the shares of that company at short intervals but should have a long term view".
In it order issued on Senthil, Sebi noted that directors/ officers/ designated employees are senior functionaries in company who should be aware of the requisite legal provisions and follow the same scrupulously.