A day after the capital market regulator barred brokerage firm Allegro Capital Pvt Ltd and its Chairman from the securities market for one year over insider trading in the shares of Biocon Ltd, the biopharmaceutical major’s Executive Chairperson, Kiran Mazumdar-Shaw on Friday said that SEBI should act “rationally” in terms of judgement in matters of alleged insider trading.

She questioned the basis for relating the Mazumdar Shaw Medical Foundation to Biocon in the judgement.

“SEBI bars Allegro Capital, its CEO over insider trading in Biocon shares – Crazy logic. What does MSMF have to do with Biocon? The officer concerned needs to explain her convoluted hypothesis. SEBI needs to act rationally in insider trading judgements,” Shaw said in a tweet.

The SEBI, in its order on Thursday, had said that Allegro Capital Chairman and CEO Kunal Ashok Kashyap, by virtue of his directorship in Mazumdar Shaw Medical Foundation and his majority shareholding in the trading member Allegro Capital which was used by the officers of the company, was allegedly in a position where he was in regular touch with the officers of the company.

A SEBI order said that in 2018, Biocon had made an announcement of an “exclusive global collaboration” with Sandoz on “NextGeneration Biosimilars” and the capital market regulator observed that after the public announcement was made, the scrip witnessed rise of 5.6 per cent in the closing price on the next day post the announcement.

It initiated an investigation to ascertain whether certain persons or entities have traded in the scrip of Biocon while they were in possession of unpublished price sensitive information and were, thus, in violation of norms to prohibit insider norms.

As per the allegations, Allegro Capital was in a temporary business relationship with Biocon and consequent to the same, Kashyap was in frequent communication with the officers of the company.

The SEBI probe found that the noticees have made wrongful notional gains of over Rs 24.68 lakh, and has directed both the brokerage and its Chairman and CEO Kashyap to jointly disgorge the amount.

The market regulator has also imposed a penalty of Rs 10 lakh each on the investment advisory firm and its head.