Wockhardt, its directors settle case with Sebi

Mumbai: Drug maker Wockhardt and its three directors have settled a securities law violation case with the Securities and Exchange Board of India (Sebi) by paying a total amount of ₹76.68 lakh as settlement charges.

The three directors include Habil Khorakiwala, Murtaza Khorakiwala and Huzaifa Khorakiwala.

The case relates to Sebi’s investigation into the trading activity in Wockhardt shares for the period January 7, 2012, to August 7, 2013.

During the period January 7, 2012, to March 8, 2013, the price of Wockhardt’s stock rose from ₹273.25 to ₹2,065, a 655% increase within 14 months, the regulator said.

An announcement was made by Wockhardt to the stock exchanges on May 24, 2013, regarding a letter issued by the US Food and Drug Administration (USFDA) to it about an ‘Import Alert’.

It was observed that the stock price fell sharply from ₹1,798.30 on May 17, 2013, to ₹1,229.70 on May 24. On August 7, 2013, the stock closed at ₹362.25, Sebi said.

The regulator said USFDA visited the manufacturing facility of Wockhardt at Waluj, Maharashtra, during March 18-22, 2013 to inspect the factory and data pertaining to an abbreviated new drug application filed by Wockhardt with the US regulator for Zoledronic acid injection. USFDA then issued Form 483 which is regarded as adverse observations on factory facilities.The share price of Wockhardt fell by over 15% during April 10-15, 2013. The price-sensitive information related to Form 483 came into existence on March 22, 2013, and it was confirmed by Wockhardt on April 15, 2013, through a press release on its website.

“During the investigation, it is observed that Wockhardt did not disclose the information related to Form 483 issuance by USFDA to its Waluj factory to the stock exchanges immediately,” Sebi said in its order on Monday.