Sebi probing stock bounce before deal

Tags: News
In a blow for the Sun Pharma-Ranbaxy deal, the Securities and Exchange Board of India (Sebi) will ask the country's stock exchanges for trading details on Ranbaxy Laboratories and Sun Pharmaceutical shares before the companies announced a merger on Monday.

A senior Sebi official told Reuters that the regulator has received multiple complaints. "We will ask exchanges on details of buy and sell trades in both Ranbaxy and Sun shares," Reuters quoted the Sebi official as saying.

A Sebi official confirmed to Financial Chronicle that the regulator was looking into the matter.

The stock exchanges told Financial Chronicle that the exchanges are looking into trading details in the days leading to the final announcement of the deal, which saw Sun Pharmaceuticals agreeing to buy Ranbaxy for $3.2 billion. "We are looking into it," said a stock exchange official, on condition of anonymity.

Ranbaxy shares had surged 24 per cent in the three trading sessions leading up to the announcement on Monday.

Amit Tandon of Institutional Investor Advisory Services (IiAS), a proxy advisory firm, said since there was a runup in prices accompanied by big volume, Sebi should conduct a probe. “We are not saying there is an insider-trading. What we are saying is probe the matter so that doubts are cleared,” Tandon said.

Following various reports on possible violation of insider-trading rules, Sun Pharmaceuticals issued a statement stating, “Our code of conduct serves as a compass that guides the actions of our employees and directors ensuring consistent and uncompromising integrity as we build trusted relationships around the world.”

On purchase of shares of Ranbaxy Labs by Silverstreet Developers LLP, Sun Pharma said it does not violate insider-trading rules. It said Sudhir Valia is not and was not a partner of Silverstreet when purchase of shares of Ranbaxy Labs was affected by it. Further, Silverstreet has two partners, both 100 per cent subsidiaries of Sun. “Hence, all the benefits flowing from the investment in Ranbaxy shall accrue to Sun Pharma,” the statement said.

Valia, executive director of Sun Pharma through his limited liability partnership, had been buying stake in Ranbaxy months before the deal, in December quarter.

Naresh Tejwani, president of the Association of National Exchanges Members of India (ANMI), told FC that if he received complaints on insider trading in Ranbaxy and Sun Pharmaceuticals by members he would take it up with Sebi.

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