Yatendra Kumar engaged in trading Wockhardt Ltd’s shares while having access to unpublished price-sensitive information.
Yatendra Kumar is also prohibited from buying, selling, or engaging in any transactions involving Wockhardt.
The Securities and Exchange Board of India (SEBI) has taken action against Yatendra Kumar, a former executive of Wockhardt Ltd, due to his involvement in insider trading. Kumar has been banned from the securities market for six months and ordered to reimburse losses amounting to more than ₹14 lakh that he avoided through his illegal activities.
Additionally, he is prohibited from buying, selling, or engaging in any transactions involving Wockhardt Ltd securities for a period of one year. SEBI conducted an investigation into the trading of Wockhardt’s shares between January 2012 and August 2013 to determine whether insider trading rules were violated.
According to a detailed 50-page order released by SEBI on Monday, it was discovered that Yatendra Kumar engaged in trading Wockhardt Ltd’s shares while having access to unpublished price-sensitive information (UPSI). This information pertained to the issuance of Form 483 by the US Food and Drug Administration (USFDA) to Wockhardt’s manufacturing facility located in Waluj, Maharashtra.
Form 483 is a detailed report issued by the USFDA when they find objectionable conditions during their inspection of manufacturing facilities. It serves as a record of adverse observations and, if not addressed, can lead to warnings and import alerts, which have financial implications for the company involved.
In this case, the USFDA issued Form 483 to Wockhardt on March 22, 2013. This information was considered price sensitive, and Wockhardt publicly disclosed it on April 15, 2013, through a press release on their website. Therefore, the period from March 22 to April 15, 2013, is recognized as a period of UPSI.
During the specified timeframe, Yatendra Kumar, who served as President of Pharma Research, Global IP, Quality Assurance/Quality Control, and Regulatory Affairs at Wockhardt, sold a total of 6,841 shares between March 22, 2013, and April 14, 2013. Furthermore, he disposed of an additional 1,041 shares between April 15, 2013, and July 31, 2013.
In his response to SEBI, Yatendra Kumar admitted that he became aware of the issuance of the form on March 22. By engaging in these trades, Kumar managed to avoid a loss of ₹14.23 lakh, thus violating insider trading regulations. As a result, SEBI imposed several restrictions on him.
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