Sebi smells rat in Sun Pharma-Ranbaxy deal

Sun Pharmaceutical Industries surged another seven per cent on Wednesday but the company came under a cloud as multiple complaints of alleged insider trading in Ranbaxy shares before the announcement of the $3.2- billion takeover have been lodged with Securities and Exchange Board of India ( Sebi). According to sources, Sebi has started collating data related to the matter from stock exchanges and clearing corporations to see whether insider trading occurred.

Shares of Ranbaxy had witnessed substantial movement on the exchanges last week. Sources said that Sebi has received several complaints regarding suspected irregularities in the trading of Ranbaxy shares in the run- up to the deal. During that period, there have been heavy intraday surges in volumes as well as prices of Ranbaxy shares.

" Because there was such kind of price movement before the deal was announced, we have decided to check with the regulator," Naresh Tejwani, president, Association of National Exchanges Members of India, said. "We will write to them by the end of the day to investigate into the matter," he added.

Sebi is also reported to be studying data available on its Integrated Market Surveillance System ( IMSS). Through IMSS, it collects data for suspicious market activities through multiple sources, including its network systems, at stock exchanges and other market infrastructure institutions.

According to sources, exchanges were believed to have been informed about the Ranbaxy deal after midnight on Sunday. Entities suspected of having prior information about the deal before the official announcement are under scanner, they added. Sun Pharma on Wednesday denied allegations of insider trading against its wholly- owned subsidiary Silverstreet Developers LLP. Sun Pharma said in a statement that the matter related to the purchase of shares of Ranbaxy by Silverstreet Developers LLP does not violate insider trading rules.

Sun's managing director Dilip Shanghvi said that the drugmaker had not received any inquiries from Sebi. In an interview to a business TV channel, he said, " We also have concern about the runup in Ranbaxy stock a few days before the transaction was announced, but we hope that nothing comes out of that inquiry.

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