The Securities Appellate Tribunal on Monday upheld Sebi's order slapping penalties on a former independent director of Ranbaxy Laboratories and his wife for violating insider trading norms.
Market regulator Sebi had imposed a penalty of Rs 50 lakh (Rs 5 million) on V K Kaul -- who was a non-executive independent director of Ranbaxy Laboratories between January 2007 and December 2008 -- and a fine of Rs 10 lakh (Rs 1 million) on his wife Bala Kaul.
On behalf of his wife, Kaul had traded in shares of Orchid Chemicals and Pharmaceuticals Ltd ahead of large investments made by Solrex Pharmaceuticals -- part of Ranbaxy.
The trading was done with the help of unpublished price sensitive information.
In its order, the tribunal said Solrex's decision to buy shares of Orchid Chemicals and Pharmaceuticals
"We, therefore, cannot find any fault with the findings arrived at by the adjudicating officer that V K Kaul had traded in the scrip of the target company (Orchid Chemicals and Pharmaceuticals) in the name of his wife when he was in possession of UPSI that Solrex was to purchase large number of shares of the target company for which funds were being arranged by Ranbaxy," SAT said.
The funds for investments by Solrex were provided by Ranbaxy to the extent of Rs 151 crore (Rs 1.51 billion) and the drug maker's the board approved the same on March 2008.
According to Sebi, Kaul being a connected person of Ranbaxy, was privy to information on Solrex's investment in Orchid Chemicals and Pharmaceuticals, based on which he traded on behalf of his wife in the scrip.