* SEBI to ask Sun Pharma, Ranbaxy for information on merger
* Ranbaxy shares surged before Sun Pharma deal announcement
* SEBI also to ask for trading data from exchanges - source
(Adds regulator plans to ask for additional disclosures,
comment from Sun Pharma's managing director)
By Himank Sharma and Zeba Siddiqui
MUMBAI, April 9 India's market regulator will
ask Ranbaxy Laboratories and Sun Pharmaceutical Industries for
more information about their planned $3.2 billion merger and
seek trading data from stock exchanges after shares in Ranbaxy
surged in the run-up to the deal, a senior source at the
regulator said on Wednesday.
Ranbaxy shares jumped 24 percent while trading
volume tripled in the three sessions ahead of Monday's
announcement that Sun Pharma would buy it in what would
be the biggest drug sector deal in the Asia-Pacific region this
"We have received multiple complaints. We will ask stock
exchanges on details of buy and sell trades in both Ranbaxy and
Sun shares," said the Securities and Exchange Board of India
(SEBI) source, who declined to be identified because he is not
authorised to speak with the media on the matter.
The official added that SEBI would also ask for "additional
disclosures" from the two drug makers.
Sun's managing director, Dilip Shanghvi, said India's
largest drug maker by market value had not received any
inquiries from SEBI in an interview with CNBC-TV 18.
"We haven't heard (from the regulator)," Shanghvi said on
"We also have concern about the run-up in Ranbaxy stock a
few days before the transaction was announced, but we hope that
nothing comes out of that inquiry."
Spokesmen for SEBI and Ranbaxy declined to comment. The
National Stock Exchange of India Ltd and BSE Ltd, India's two
biggest exchanges, also declined to comment.
The president of an Indian brokerage association said it
would formally ask the regulator to investigate trading in
"Because there was such kind of price movement before the
deal was announced, we have decided to check with the
regulator," Naresh Tejwani, president of the Association of
National Exchanges Members of India (ANMI), said on Wednesday.
Indian stock markets have seen previous cases of sudden
sharp movements in company shares ahead of big corporate
announcements, raising frequent suspicion about insider trading
that have damaged retail investor confidence.
For example, last June, Infosys Ltd's shares and
option volumes surged before the surprise announcement that
founder Narayan Murthy was returning as executive chairman.
The regulator has been accused by some market participants
of being slow to investigate suspected insider trading and
ill-equipped to fight securities fraud. Its investigations can
take years and are often conducted in secrecy.
Like other global regulators, SEBI has often resorted to
fines and settlements, which are easier to obtain than criminal
Its most high profile case so far has been investigating a
unit of energy conglomerate Reliance Industries Ltd
over a suspected case of insider trading in 2007.
After six years of investigation, SEBI last year fined
Reliance 110 million Indian rupees ($1.83 million), saying it
had found enough evidence of insider trading. The energy
company, which had net profit of 55.1 billion rupees in the
October-December quarter, is appealing to SEBI's appellate body.
The regulator is expected to debut new insider trading rules
later this year that would require executives to disclose
planned trading activity and also require companies to monitor
their employees for trading.
Retail investors have been heavy sellers in Indian markets
and have redeemed about $5.2 billion from equity funds in India
($1 = 60.0975 Indian Rupees)
(Additional reporting by Abhishek Vishnoi; editing by Tony
Munroe and Tom Pfeiffer)