Sebi slaps Rs 50L penalty on Jubilant Life Sciences, 4 others

Sebi today imposed a total fine of Rs 50 lakh on Jubilant Life Sciences, its three promoter entities and a director for violation of norms pertaining to price sensitive information.
While a fine of Rs 10 lakh has been slapped on the company, the four other entities have been penalised to the tune of Rs 10 lakh each.
The company was found to have made delayed disclosure to the exchanges regarding price sensitive information.
Promoter entities -- Jubilant Stock Holding, Shyam Sunder Bhartia and Hari Shankar Bhartia -- as well as Amit Arora, the firm's senior vice president, FP&A (Financial planning and analysis) have been fined. The watchdog found that they traded in the shares "when in possession" of unpublished price sensitive information.

Shyam Bhartia is the non-executive chairman and director of the firm, while Hari Bhartia is co-chairman and managing director. They are also directors of Jubilant Stock Holding.
During an inspection, Sebi found that Jubilant Life Sciences had violated the listing agreement, while the other four entities had contravened PIT (Prohibition of Insider Trading) Regulations.

The violations pertain to instances during 2013 and 2014.
The drug firm had announced that one of its manufacturing facility in Quebec, Canada had been issued a warning letter dated February 20, 2013 by the USFDA. The letter was received by Jean Francois Hebert, vice president-operations, JHS, Canada, on February 22 and the same was informed to Shyam Bhartia, Hari Bhartia and Arora.

However, the company made a delayed announcement about it only on February 27, according to Sebi.
In another instance, the USFDA served a warning letter -- dated November 27, 2013 -- to a manufacturing facility in Spokane, Washington. It was received by Marcelo Morales, CEO of the business at Spokane on December 1 and the three individuals were informed about the same.
An announcement about the warning letter was made to the exchanges only on December 5, 2013, as per Sebi.
Sebi also noted on May 28, 2013, China's commerce ministry announced imposing provisional duties on JHS, as well as on other Indian producers and Japanese producers.

While the Chinese ministry's decision was expected to have an impact on the JHS' business, the company made an announcement about the same only on July 25, 2013 with a delay of around two months, the regulator noted.
Separately, the drug firm had also received communication on February 25, 2014 from the USFDA, classifying its pharmaceutical manufacturing facility at Montreal, Canada as 'Acceptable'. However, an announcement in this regard was made only on February 27.
"It is amply established that the event/ information (viz the warning letter/ acceptable report/ imposition of duties etc) were the PSI/ material and were required to have been disclosed to the stock exchange by the noticee no 1 (Jubilant Life Sciences)," under listing agreement, Sebi said.

Further, Securities and Exchange Board of India (Sebi) noted that JHS had made delayed disclosures to the stock exchange regarding price sensitive information.
While noting that available records neither reveals specify disproportionate gains or unfair advantage made by the the entities, Sebi's Adjudicating Officer Rachna Anand in the 70-page order said the gravity of violations are in the nature of causing detriment to the investors.