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The former head of the pharma research vertical at Wockhardt Limited, Yatendra Kumar, was asked to disgorge losses averted by trading using unpublished price-sensitive information (UPSI) by the market regulator on June 19.
Kumar was asked to disgorge losses averted to the tune of Rs 14,23,074, for having violated insider-trading regulations. He has also been asked not to participate in the securities market for six months.
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The Securities and Exchange Board of India (Sebi) had conducted an investigation into the trading in the company’s scrip between January 7, 2012, and August 7, 2013, to see if insider-trading regulation or PFUTP Regulations were violated. During this investigation period, Kumar worked for Wockhardt as – President – Pharma Research, Global IP, QA/QC & Regulatory Affairs, according to the Sebi order.
The price of the scrip had multiplied over 10x between January 7, 2012, and March 12, 2013 rising from Rs 265.55 to Rs 2,168.8 in the period. The price of the scrip plummeted from Rs 1798.30 on May 17, 2013, to Rs 1229.70 on May 24, 2013, and then further to Rs 808.3 on July 2013. This was following news related to USFA’s visit to the company’s Waluj factory and subsequent issue of form 483, import alert and a warning letter.
Form 483 is issued if USFDA finds objectionable conditions upon inspection of facilities, then a warning alert is issued, and import alerts are sent out to district offices and FDA officers regarding the violations by foreign manufacturers and constitute automatic detention list.
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According to the Sebi order, Yatendra Kumar sold 6,841 shares between March 22, 2013, and April 14, 2013; and sold 1,041 shares between April 15, 2013, and July 31, 2013.
The issue of form 483 was disclosed on the company website only on April 15, 2013. Meanwhile, Kumar informed the Sebi investigators that he had known about the issue of form 483 on March 22, 2013. That is, he had known nearly a month before the information was made public and he had traded on that information, which helped him avert losses to the extent he has been asked to disgorge.
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